Author: Jacqueline Button Public sector employees worried about their pay and pensions aren’t the only ones affected by the new government’s clamp down on spending. Property Week reported last month (4/6/10) that on 24 May Whitehall’s Efficiency and Reform Group announced a halt to lease extensions in the current financial year that do not have Treasury approval. The government is also planning to exercise break options which it has this year, including at Eland House, Victoria Street SW1, the 24,200 sq ft headquarters of the Communities and Local Government Department. A client of ours has had a similar experience – a government department tenant, initially keen to renew their lease have backed out of negotiations and will be relocating to cheaper premises. (Spare a thought for the staff – no pay rise, no pension and forced to work in the back of beyond). So landlords of public sector bodies must beware – your once star tenants are fading. Check break dates and expiry dates. If any are coming up soon, you may find yourself looking for a new tenant.
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Public Sector Lease Freeze
Author: Guy Thomas Everyone knows that Julius Caesar “came a cropper” on the “Ides of March” (15th March). Well, supporters of Pompey’s CVA may yet come to dread the week containing the Ides of July (15th July 2010). Predictions and augers can (as Caesar found out) be tricky, with that in mind, Thursday, 15th July looks likely to be last day when Her Majesty’s Revenue & Customs (HMRC) can issue a challenge against Portsmouth City Football Club’s Company Voluntary Arrangement (CVA). Following the last meeting of Pompey’s creditors on 17th June 2010 , there was a lot of positive publicity for the Joint Administrators of Portsmouth City Football Club. The Chairman of that meeting (at which the CVA was approved) was Mr Andrew Andronikou (one of the joint Administrators of Pompey). HMRC challenge? If HMRC do decide to “have a go” then they are likely to chuck the kitchen sink at it in the hope that one of the other issues raised might be sufficient to force a reconsideration of the CVA approval. Likely grounds for the application include: 1. The reduction of HMRC’s “creditors” vote from £37,768,387.13 to £23,895,044.67? i.e. taking away their ability to veto the CVA. 2. The inclusion of the “Football Creditors” in the vote of “unsecured creditors” when they should have been treated as “secured borrowers”? 3. The inclusion of supposedly secured creditors like Portpin (Mr. Chanirai) and Ocadia (Mr Gaydamak) in the vote of “unsecured creditors”. If these or any challenges like them succeed then a 75% majority cannot be achieved. No 75%, no CVA. No CVA? Well let’s just say the Championship will be a harsher place with a further point deduction for Pompey. Et tu Pompey? To read the full article, click here .
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Pompey: Beware the Ides of July!
Authors: Steve Kenneford & Caroline Beale There still appears to be confusion over the obligation to provide Home Information Packs since the announcement to suspend the same on the 21st May 2010. The situation is as follows:- Any/all properties marketed prior to the 21st May 2010 will require a fully compliant HIP. Any properties marketed after the 21st May 2010 will no longer require a HIP but will require an Energy Performance Certificate to be provided at the cost of the seller. The cost of the local authority and drainage searches will once again fall upon the Purchaser. So, effectively, with the exception of the EPC which is being retained, the last 4 years and probably the 3 before that (whilst we were all preparing ourselves for the new HIPS revolution) were a complete waste of time, effort, money and a further erosion of our already depleted rainforests in terms of the monumental waste of paper involved. Thanks for everything Yvette (Cooper)! It remains to be seen whether any further changes will be made and we will keep you advised.
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Life Without HIPS
Author: Guy Thomas An interesting piece from Business Advisory and Insolvency specialists BDO that reminds directors of football clubs that as the fans enjoy the thrill of the competition in South Africa, it shouldn’t distract them from their own issues closer to home. www.bdoadvisorybites.co.uk/index.php?id=298&uid=6270
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Enjoy the Game…
Author: Guy Thomas The BBC has recently reported the latest twist in the Pompey’s tale. The surprise proposal from Griffins comes just a few days before the next creditors meeting of Portsmouth City FC creditors at Fratton Park, called for 17th June 2010, which will consider and vote on the original CVA proposal . This has provoked an interesting exchange between the respective firms. No doubt this will be further played out in the media in the run up to what promises to be a feisty meeting. Also, in no particular order; HMRC rejected the original CVA proposal then UHY Hacker Young came out with the Administrators response to Griffins . In response to that (as well as other commentary), Griffins have come out with a follow up statement . A scan of the media coverage and Pompey related forums has also been quite revealing. Many seem unaware that Pompey’s creditors can propose a modification to the original CVA proposal; it’s a right that isn’t just restricted to Insolvency Practitioners who are acting on behalf of other creditors. Once again this illustrates the power to determine the outcome of the Administration of Pompey lies not with the insolvency practitioners but the creditors who are entitled to vote at the CVA meeting. There are a few other points about the above exchange as well as the Forum posts that I would like to draw out: Few seem to understand that Griffins are acting on behalf of some of Pompey’s creditors, and even fewer still wonder which creditors Griffins act for. Griffins put forward three modifications, the focus on the former owners/directors potential personal liability has not done justice to their sensible analysis concerning the other options for cash flow and income which could increase the proposed dividend (even without any withdrawal of creditors claims) from 20/25p to 65p in the £. A significant increase that seems to have been largely passed by. It seems that with the Griffins approach, it is not necessary that the players are sold for £30m. If they were given away creditors would still get at least 37p in the £. There is also another 8p on top of the club stays in the championship or gets promoted back to the premier league. Griffins have specifically denied that they want any role as Administrator or CVA supervisor for Pompey – given their track record as investigative liquidators (often acting for HMRC) it’s surprising that this denial appears to extend to the role of “old” Pompey’s liquidator if the CVA and subsequent transfer of the clubs “football share” to a “new” Pompey goes ahead- I would have thought that role would have fitted them like a glove. Perhaps they are making sure that the modifications are the focus of all the attention rather than a competition for fees. The Griffins proposal is clearly designed to put pressure on the CVA nominee and the original CVA’s informal “backers” to “up the ante” and agree to more of a dividend for unsecured creditors. Until the creditors vote at the meeting on the 17th, none of the options for the dividend (20p or 25p or 65p or even 99p) are set in stone. As always it’s the creditors’ choice. The more they squeeze out for creditors the less of any future earnings/cash-flow will be available for the “new” club. That’s a tricky balance and one that Griffins and UHY Hacker Young disagree on. It will be interesting to see if future coverage identifies that balancing act as being between the creditors needs and “their club” (as fans, etc) having less cash for players, facilities etc next season, or more realistically in my view, whether they see the balance as being between the unsecured creditors and the future owner of the “new” club, who will have less short to medium term “value” in the company that he is buying out of the CVA - if the Griffins analysis is accepted. UHY Hacker Young have hinted that the level of unsecured creditors will fall but have not set out by how much this will be. This could further increase the return to the remaining creditors and might be a major factor in any modifications. There is more to be written on this (hopefully) before the creditors meeting; not least of which will be the issue of any potential personal liability of the former directors /owners of the club and whether they might effectively assert a right of “set off” against the club if any claim were made against them. This complex area is difficult to describe with “broad brushes” but case law indicates that a person who is liable to an insolvent company (known as a “contributory”) cannot “set –off” money owed by the company to him. Hopefully, the argument between Griffins and UYH Hacker Young will benefit and not baffle the creditors at the forthcoming meeting and their declaration of “non” interest in an appointment will help clarify Griffins role. More hopefully still, yet another modification will be forthcoming….I wonder if another creditor has another proposal lined up to follow on from Griffins? Say 45-50p in the £….. Now that would make for a very interesting creditors meeting on the 17th.
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Creditors’ Rights versus Fans’ Dreams… Or is it?
Author: Marilyn Bell It’s good to see that our new coalitition government have expressed support for better access to children for grandparents when parents separate. It’s a double blow for many grandparents that not only has their child’s marriage or partnership broken up, but that they are not able to see their grandchildren. For the children they have not only lost their daily contact with one of their parents, but the love and support from one set of grandparents has also disappeared. Grandparents will welcome government support that recognises their importance in their grandchildren’s lives.
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New Coalition Government Promises To Give More Rights To Grandparents
Author: Chris Alexander The Ministry of Justice has announced that the proposed increase in the rent threshold for assured shorthold tenancies is to be delayed until October. Currently, tenancies with a rent in excess of £25,000 per annum are excluded from the assured shorthold regime. The proposal to increase this threshold to £100,000 was announced in February and was due to be implemented this month. It was intended to apply to existing as well as new tenancies, which would put onerous obligations upon landlords of tenancies that are currently excluded, to comply with the deposit protection requirements for assured shorthold tenancies within a short window. As many assured shorthold landlords have found out to their cost since the deposit protection schemes were introduced in 2008. Non compliance can prove to be an expensive mistake for landlords, with the tenants being able to claim three times the value of the deposit from them.
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Assured shorthold threshold increase delayed
Author: Nikki Petken Coca Cola have been criticised this week for an advertisement that appeared to encourage employees to throw “sickies”. The advert for Glaceau Vitamin Water (a brand owned by Coca Cola) included the wording that “If you’ve had to use sick days because you’ve actually been sick, then you’re seriously missing out”. Amusing, but small business groups were not impressed by the tongue in cheek advertising and they do have a valid point. “Pulling or throwing a sickie” is still an accepted culture amongst workforces yet employee absence costs the economy almost £12 billion a year in lost working days. With the warm weather approaching it is important businesses review their absence management to ensure they distinguish those that are genuinely ill and for those that demonstrate a suspicious pattern of absence they are able to nip it in the bud. Employers will also soon receive the new fit notes, one of the governments strategies to tackle long term sickness absence. For a brief overview see our recent stay alert at by clicking here.
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Vitamin Water - To throw a sickie, or not to throw a sickie…?
Author: Chris Cook A recently published survey of UK workers in hygiene company SCA has uncovered that a fifth of the workforce will not take a day off work even when they are genuinely sick. It was also revealed that 26.2% will call in sick, but are nervous about doing this due to their line managers’ and colleagues’ reaction in the past when they were ill. This is likely to be typical of most businesses across the UK. The Chartered Institute of Personnel and Development (CIPD) has suggested that in the current economic downturn, workers are more likely to wish to go to work when they are unwell. This is because of concern that their absence will be viewed as a lack of commitment to their job. However, it is important for workers who are genuinely unwell to consider the effect of coming into work on the rest of the workforce. This in turn is likely to be counterproductive for employers in spreading illness to other members of staff, in turn leading to a decline in performance of the business as a whole through its employees having difficulties concentrating, making mistakes and lowering the standard of its service to customers. Consequently managers are advised to be observant if an employee at work might be unwell, and if necessary tell them to go home to recuperate.
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Fifth of workforce not taking time off when sick
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
