Author: Guy Thomas Southend United Football Club , Sheffield Wednesday Football Club  , and Cardiff City Football Club Limited . All three clubs are in the Royal Courts of Justice today facing hearings to decide whether they should be wound up. Its been well reported that payments for historic debt have already been made with Her Majesty’s Revenue & Customs (HMRC) to avoid any immediate doom. However, just because they lost the last two rounds with Pompey , HMRC are not going anywhere. In fact the defeats, especially whilst the issue of the Football Creditors Rule remains undecided, will have likely increased the desire of HMRC to hammer down on recalcitrant Clubs who are late with their tax. Further, a winding up petition puts HMRC in the right position to set up and agree payments for future tax liability. Barring a late intervention by other creditors, such as “Charterhouse Commercial Finance Plc” against Southend, It looks like these three clubs “deals” with HMRC will help them avoid disaster today. But they (and other Clubs) had better keep up the payments on the agreed terms, or else HMRC will be back to Court for more attempts at winding them up. The golden rule with all debt repayments, football clubs and ordinary companies alike is to keep the creditors informed. Above all, no surprises. Having said that, I can’t see HMRC being too sympathetic to any Clubs that need to change payment terms later in the season, can you?

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Cardiff In Court, Shrimpers Slip Up and Wednesday on Wednesday - Three Clubs Face Winding Up Hearings Today

Author: Guy Thomas The hearing of Her Majesty’s Revenue & Customs’ (HMRC) appeal against the approval of Portsmouth’s Company Voluntary Agreement (CVA) kicked off this morning in Court 52 of the Royal Courts of Justice in front of Mr Justice Mann. Portsmouth Today reported on the day’s proceedings by Twitter and with on line reports. BBC’s Dan Roan also attended and blogged before the hearing. For all of you that can’t wait for the more considered analysis, the first days highlights are as follows: The hearing started briefly but was immediately adjourned so the judge, Mr Justice Mann, to read extra papers submitted by HMRC. Having read the additional evidence, the Judge began proceedings by listening to the submissions of Gregory Mitchell QC (for HMRC). Mr Mitchell said the taxpayer was always the victim when a football club went into administration. ‘It’s always the Treasury which loses out when a football club becomes insolvent.  Mr Mitchell QC went on to say that HMRC had worked out Pompey owed them over £30m. ‘This assessment goes back some way - to the tax year of 2006/07 - and has been a very complex investigation. ‘PAYE should have been paid and has not been paid. He went on to describe the arrangements as. ‘a sham. It was a way in which the club could pay the money into a tax haven.’ Mr Mitchell went on to criticise another ’sham’ he alleged Pompey used to avoid paying tax. This concerned money paid into players’ employment benefit trusts in what he described as ‘tax havens’.  He said: ‘The Revenue says these are disguised payments of salaries on which PAYE should have been paid.’ The arguments then went on to “whether HMRC might have suffered prejudicial treatment by Pompey” and, “whether that prejudicial treatment was unfair”. Mr Justice Mann also queried exactly which grounds the Revenue has brought the case against the club and the differences between the rules of association for the premier league and football league (and what happens when a club goes bust in either league) and finally what happened when Wimbledon FC went bust. There will be more tomorrow and the judgement will be handed down on Thursday. As he went in to Court this morning Pompey’s chief executive David Lampitt was reported to be  “nervous” about these proceedings….It’s too early to tell but that sounds about right!

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Pompey in the Dock – Day 1 : ‘This appeal is not about precise figures, it’s about principle”

Author: Victoria Wells   The sudden death last month of former “Diff’rent Strokes” star Gary Coleman has highlighted the importance of having a valid Will, and keeping it up to date. Despite his showbiz background, Gary’s personal circumstances were in some ways not that different to many of us, with both an ex-wife and a former girlfriend on the scene, and the lack of clarity around his wishes has led - perhaps inevitably - to dispute between the two. There is also uncertainty about what to do with his ashes, surely a situation which none of us would want our loved ones to be left in. In his 1999 Will, Gary gave instructions about his funeral, that he wanted it conducted by people who had no financial ties to him and who “can look each other in the eyes and say they really cared personally for Gary Coleman”. He also in the Will appointed a close friend as his executor. In 2005 it appears that Gary made a new Will, in favour of his then girlfriend, Anna Gray. The Will specified that he did not want any sort of funeral service. Following his marriage to Shannon Price in 2007, he made a “homemade” Will, in which he named his wife as his sole beneficiary. Apparently this was signed, but not witnessed, so lacks full testamentary validity. They divorced in 2008. Perhaps inevitably, Ms Price and Ms Gray are now in dispute about who should administer Gary’s estate, and who is entitled to that estate. Ms Gray argues that they were together for eight years, and that the 2005 Will is the valid “last Will and Testament”. Ms Gray contends that, as they were still living together at Gary’s death, despite their divorce, she is entitled to be treated as his “wife”. A lawyer has now been appointed by the courts to sort out the mess, and in the meantime both Gary’s ashes and his estate remain in limbo. The heartache and expense of all of this could all have been avoided if Gary, following each major change of circumstance in his life, had taken professional advice to ensure that his latest Will matched his current situation and that his belongings and his funeral would be dealt with as he wished, by the people he wanted.

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TV Star’s Death Highlights Importance of Wills

Author: Nat Young The European Court of Justice has finally ruled on the question of the application of trademark law to keywords. When someone enters a trademarked word into an internet search engine, the natural result is that sites including the trademarked word appear, in order of relevance. However, search engine providers often guarantee traders that their sites will appear as sponsored links in the event someone enters certain terms. This practice - particularly associated with Google’s Adwords system - means that a website can appear as a result of a search even without the search term being displayed on the site. Trademark proprietors are usually unhappy about this practice, since it means that their websites appear alongside competitor’s websites, even where a search had been made for their specific mark. This means that unofficial or even counterfeit sellers can gain as much prominence for their sites as official distributors. On the other hand, the use of registered trademarks as paid-for keywords is clearly a rather different kind of use to that usually in issue in trademark litigation. Normally, a trademark is used when it appears as a visible sign. With paid for keywords, the trademark did not need to be shown on a site for it to appear in the list of sponsored sites. The trademark was processed in a way invisible to the consumer carrying out the search. The issue has been often considered in the US courts, but in the UK there was much less authority on the point. Thus trademark lawyers were eagerly awaiting the ECJ’s decision in Google France v Louis Vuitton Malletier , which concerned the use of Louis Vuitton’s trademarks by Google via Adwords. In simple terms, the court cleared Google, deciding that search engine providers could have a system of keywords without that amounting to trade mark infringement. However, the court was not so accommodating to advertisers who used others’ trade marks as paid-for keywords. It held that they could still be liable, if their sites made it difficult or impossible for the average internet user to tell if the goods came from the trade mark proprietor or a third party. For this reason, there are still uncertainties from the point of view of traders using keywords, as opposed to search engine providers. Trade mark proprietors will no doubt start looking in this direction, and it will be interesting to see what tests the courts develop when considering what makes it ‘difficult’ for the average internet user to tell the origin of goods.

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The Searching Question: An Answer at Last

Author: Guy Thomas In a dramatic turn of events, HM Revenue and Customs (HMRC) have announced that they will not use the next listed hearing to pursue its challenge to the appointment of Administrators by Pointpin Limited, the British Virgin Island based company which is controlled by Mr. Chainrai. Although the hearing, scheduled to be heard at the Royal Courts of Justice in London on Monday 15th March 2010, will still go ahead; the anticipated tussle will not be as spectacular as many had awaited. It has been further reported that “Despite HMRC continuing to have a number of remaining questions and concerns around the relationships of various parties, and a lack of detail of financial affairs, HMRC has now advised the Administrators that we will no longer challenge the validity of the Administrator’s appointment.” “This comes in light of the additional material now provided following the judge’s directions of 2 March 2010.” Portsmouth and its’ Administrators should not feel completely reassured by the further reporting that HMRC are “still not happy” but “do not see any benefit in continuing an expensive, long-running, legal protest against the club”.  What now? In no particular order, some of the things that are still to come in this administration include: 1. HMRC will keep a close eye on events; they can do this through a creditors committee (which is meant to oversee the actions and fees of the Administrator). 2. Unsecured creditors (like HMRC) put in their proof of debt to the Administrator setting out what they are owed [most creditors do this without taking legal advice]. 3. Statutory Investigations will be carried out by the Administrator into the conduct of the club, its directors and any who acted as if they were directors. The Administrator submits a “D” report to the Secretary of State for BIS. 4. The directors finalise their statement of affairs and a report goes out to creditors on the events that led to formal insolvency. This may include their view of when the club became insolvent. This is usually followed by a meeting of the creditors to vote on the housekeeping issues for the Administration. 5. The League will decide on the first part of the likely point’s deductions. Part “two” will depend on the outcome of any proposal to exit the Administration. The exit the League usually expects is a Creditors Voluntary Arrangement. 6. The Administrator will continue to look for savings in costs. Players are unlikely to be made redundant. The Professional Footballers’ Association has strong influence in this area. However that doesn’t exclude the likelihood that loan agreements will be cancelled to save the salary costs. It’s been reported Pompey having six temporary signings on their books. 7. The Administrator looks to realize assets for creditors and or raise finance to allow continuing trading. It has been reported that Mr Chainrai will provide the funding and the Administrator is looking for bids. Anyone got a spare £15 million?

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Portsmouth FC continued: HMRC thow in the towel…but “still not happy”

Author: Guy Thomas Until the Court orders otherwise, Andrew Andronikou , of insolvency firm UHY Hacker Young remains as an Administrator of Portsmouth City Football Club. The paperwork appointing him was filed at the High Court on Friday, 26th February. Incidentally the appointment names three administrators. Mr Andronikou is the “lead” administrator as far as the media is concerned, but he has no special status above the other two in statutory terms - their responsibilities, powers and duties are the same. It has been well reported that HMRC are seeking to challenge that administration appointment. The first hearing was on 2 March 2010 and you may have been unlucky enough to catch my comments on Sky Sports News before the hearing. The application to challenge the Administration has been adjourned, until the week beginning 15th March and I will be writing more about that closer to the time. Whichever insolvency mechanism the Court decides upon (i.e. Administration or Liquidation), you may be wondering what will happen next for the former directors of the club (or anyone who may have acted as if they were a director). Is Administration the complete end of the directors’ involvement with the club? Maybe not. It seems likely that under Mr Andronikou, some of the former directors will continue in place (hopefully to help establish and maintain the clubs value as well as assist the Administrator’s work). However that assistance will not protect them from any statutory investigation by the Administrator concerning their conduct before the Administration took place. Insolvency Practitioner & Accountant Nick O’Reilly of Vantis, who recently examined the club’s books, said Pompey accounts were “completely dysfunctional” and its business methods had gone “against all good governance”.  Ouch! “I came away not knowing who controlled what,” O’Reilly told BBC Sport. The problem for the directors of the club and any company which enters Administration is this; when the company’s financial position was deteriorating there was a “tipping point” when the interests of shareholders become secondary to the interests of creditors. I don’t know when that point was or if there was in fact any wrongdoing by the directors of Portsmouth FC. The Judge in the (now suspended) winding up proceedings indicated in February, that this “tipping point” may have passed some time before the club entered Administration. After Portsmouth entered Administration then one of the roles of the Administrator put in charge of that process is to review the actions of directors in the period leading up to the Administration. If the Court subsequently orders the liquidation of the club then a liquidator will have to carry out the same investigation and report to the Secretary of State. As things stand, the Administrator will consider three stages: when the club became insolvent; when a club entered into Administration formally; and the period between those stages. The courts have long been able to impose orders disqualifying company directors. In 1986 the Company Directors Disqualification Act (CDDA) was brought in to deal with (amongst other things) “ Unfit conduct” by directors in insolvent companies. One of the definitions of an “insolvent company” is one that enters administration at a time when its liabilities exceed its assets. Whether or not there has been any “unfit conduct”, then the Administrator or Official Receiver has a duty to send the Secretary of State for Business Innovation and Skills (BIS) a report on the conduct of all directors who were in office in the last 3 years of the company’s trading. This is known as the “D” report. The most common examples of the type of conduct reported to the Secretary of State are; allowing the company to continue to trade when it was unable to pay its debts, failure to keep proper accounting records, failure to prepare and file accounts or make returns to Companies House and failure to submit returns or pay the Crown any tax due. The Administrators report is strictly confidential and no matter how much work the current directors carry out or assist the Clubs Administrator, it remains a highly confidential report which cannot be dis-closed to them. It is solely for use by the Secretary of State for BIS. The Secretary of State will then weigh the evidence; possibly carry out their own further investigation (depending on the report). If there is substantial evidence of unfit conduct they then have to decide whether it is in the public interest to prosecute the director or directors concerned. Any proceedings are brought by the Secretary of State for BIS through the Official Receiver.  The matter is heard, and decided by the Court, unless the Secretary of State accepts a disqualification undertaking from a director. The minimum period of disqualification is 2 years and the maximum 15 years.  If disqualified, unless he or she has court permission, the person is disqualified for the period stated in the order (or undertaking) from (amongst other things) being a director of a company, or directly or indirectly being concerned or taking part in the promotion, formation or management of a company. A wide definition to cover a lot of different kinds of work for a company. If someone breaches the order or undertaking then disqualified person and any person who assists them will be committing a criminal offence and is liable to be prosecuted. If such a prosecution takes place they may also be held personally liable for all the debts of the company concerned that were incurred after they were involved in any role from which the person was disqualified. Let’s be clear, we don’t yet know what really took place at Fratton Park in the months leading up to Administration and I don’t envy Mr Andronikou’s job in investigating the affairs of the club or explaining the basis of his appointment to the Court. I don’t know if there has been any breach of duties by the directors of the club. However, I do know this; Portsmouth’s journey through formal insolvency still has a long way to go and it certainly won’t be dull.

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They Think it’s All Over…What Next for the Directors of Portsmouth FC?

Author: Guy Thomas There were six winding up petitions for football clubs in the High Court today. Two of them relate to Portsmouth! Hinckley United Football Club      Brighton Football Club Portsmouth City Football Club       Portsmouth City Football Club  (again!)     Southend United Football Club      Cardiff City Football Club       Cardiff & Southend have won a temporary reprise but Portsmouth’s problems have if anything intensified. Click here to view the article that appeared on the BBC website. I understand that Portsmouth have been asked to provide a ‘statement of affairs’ within the next week. Such a statement is drawn up by a specialist insolvency practitioner and will be very difficult to produce in such a short space of time, if that is the case the club looks set for administration. Given the minimum 10 point penalty that the Premier League may impose, it is highly likely that the club will , in the future, be preparing its finances on the basis it will be in the Championship next season. The statement of affairs will likely be made on the basis that Portsmouth is shortly going to be a Championship rather than Premier League club. Leeds, of all clubs, is actually a positive example for Portsmouth as they have managed to reduce long term overheads, such as player wages, and operate well as League One rather than Premier League club. Things may get worse before they get better, but the silver lining is that Portsmouth, like Leeds, has a large fan-base which virtually guarantees revenue over the next few years, and should enable them to bounce back. Depending on how things play out in the next couple of weeks in the Courts, next season looks likely to see a resurgent Leeds and a under pressure Portsmouth as competitors in the Championship seeking a return to top flight football. If HMRC is to maintain its new hard-line approach Portsmouth will not be the last Premiership club visiting the High Court in 2010. For too long, top flight clubs and their owners have been able to palm off their smaller and unsecured creditors but it looks like that is changing. The problem for clubs is that as soon as one creditor starts insolvency proceedings, as HMRC is, all the others, for example other clubs owed transfer fees, will follow suit. Many recent football insolvency (and near misses) in the lower leagues have been prompted by this change in stance by HMRC.

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Six of the Best

Author: Guy Thomas Earlier today, The Times Online reported on the Vantis Group’s interim results. Particular emphasis has been placed on the impact of the firm’s involvement in the Liquidation of Stamford International Bank Limited. Insolvency Practitioners (and their lawyers) face a difficult assessment when approaching a new appointment. Contrary to the widely held assumptions of many media and professional commentators; the acceptance of an appointment by an insolvency practitioner carries significant responsibility and potentially huge liability. As well as personal liability for many of their actions, the insolvency practitioner must also assess the cost /benefit of funding future litigation. As indicated in the above article, one of these factors is (when faced with significant opposition from a competing stakeholder with very deep pockets) how long will it be before there is likely to be sufficient realisation for the creditors and the insolvency estate. In this case, the ongoing tussle between the US Court appointed Receiver and Antiguan Court appointed Liquidators has spawned multiple and complex litigation across the globe. It should go with out saying that such complex international litigation can be costly. In this case, it appears the US Court appointed receiver has rigorously sought to oppose the Antiguan appointed liquidators attempts to realise assets at almost every turn. In addition to the obvious point concerning the management of cash flow inherent in any business, this also serves to illustrate a useful lesson for creditors and stakeholders in any formal insolvency process. Contrary to popular belief, all formal insolvency processes are subject to potential review by the Courts, stakeholders and creditors. Expert advice should always be sought, particularly where significant amounts are involved and again, as with any other business, litigation is often the backdrop to ongoing negotiation between the parties.

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The challenge of insolvency: Vantis and Stamford International Bank

Author: Laura Allen Diageo is in the process of taking legal action against Sainsbury’s for selling it’s own version of the gin-based drink called Pitcher’s. Sainsbury’s released Pitcher’s back in April this year stating that it was available in time for events such as Ascot, Henley and Wimbledon. Sainsbury’s has also advertised Pitcher’s as being cheaper than the branded equivalent, as well as saying that it has performed better in taste tests. Trademark experts say that Diageo is likely to be concerned that Sainsbury’s will be passing off the ‘copy’ drink as Pimm’s, as they have recently spent millions of pounds advertising their product using the catchphrase “it’s Pimm’s o’clock”. Comparisons can be drawn between the packaging of the two drinks, with both using red lettering in similar fonts, with a gold logo at the top of the label. This is not the first time that such matters have reached the courts, in 1997 Asda was found guilty of passing off its Puffin bars as United Biscuit’s Penguin biscuits. Brand owners will now be watching this matter carefully as it may encourage them to come forward if other retailers have ‘copycat’ items on their shelves. Diageo has admitted that it is taking legal proceedings in relation to an intellectual property matter, with Sainsbury’s saying that it will defend itself ‘vigorously’ against the allegations.

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Protect your brand - Diageo and Sainsbury’s in legal battle over alleged copy of Pimm’s drink

Andria Bolton

Local Solicitors UK | Compensation UK

Author: Marilyn Bell On 27 April this year the family court doors were opened. Some would say this was just by a crack because of the reporting restrictions. The Justice Secretary Jack Straw is now proposing to improve the transparency of the family court  by relaxing the reporting restrictions.    So far so good but where will this take us. Cases involving children are some of the most sensitive.  There are two main kinds of proceedings involving children:  Private law proceedings involve disputes, usually between the parents, as to where the children shall live and how much contact they shall have with the non resident parent. Understandably pressure has come from Fathers who feel they have been denied contact with their children and opening up the family court is welcomed as long as the anonymity of the children can be assured. Public law proceedings usually involve children being removed from their parents and taken into the care of the local authority. Ultimately the children may return to their parents, or be fostered, or adopted. The media can now attend Court and hear the evidence. However, they are already realising that the main body of the evidence is contained in the detailed documentation usually running to many lever arch folders. How is this to be approached in the light of greater transparency? Reporters are already suggesting they should be able to read the experts reports, but the experts reports refer to the documents the experts has relied on. Should all these documents therefore be available? Parents may disagree with the experts, if so, should the media therefore have the parents statements as well?         These are just some of the questions that will have to be taken into consideration.

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Opening up our family courts