The Director’s Friend – Director disqualification and Compensation to Creditors(s)

In a my blog dated 21 December 2016 (see: http://www.breezeandwyles.co.uk/more-bad-news-for-directors-and-their-personal-liability/) I talked about the new risk to directors in the context of Director Disqualification investigations being that the Secretary of State can now also seek compensation from the director(s) where loss has been caused to one or more creditors of the company. That is for the benefit for that creditor or creditors.

AN UPDATE:

In a magazine aimed at Licensed Insolvency Practitioners (Dear IP) the Secretary of State (that is the Insolvency Service (the ‘IS’)) set out in broad terms what their approach is likely to be.

THE DIRECTORS EXPOSURE:

It would appear that the director at most risk of being subject to disqualification and concurrent compensation proceedings for personal liability is where:

  • Other remedies have either failed or for, whatever reason, are not available. For example, the Liquidator or Administrator failed or was for financial, legal or factual reasons unable to bring a claim;
  • The director has not made any other financial contribution in recompense for the misconduct;
  • The Liquidator, Administrator or the prosecuting authorities in a criminal referral have not indicated to the Secretary of State that they are bringing or contemplating bringing action against the director;
  • The Liquidator or Administrator have identified that the director has financial means. However, in which case the director should be mindful that any separate cause of action could be assigned by the Liquidator or Administrator to a purchaser of insolvency claims to be pursued; and / or
  • Creditors have not taken action themselves.

COMMENT:

Therefore, with the new compensation regime it is the case that a director of a company is now further exposed to further risk of personal liability.

The well-advised director should be mindful of whether or not they are exposed to a claim for compensation and should seek and obtain legal advice as soon as they are written to by the IS making enquiries about a company. This is important because the solicitor can advise you on where your financial exposure may lie and how to mitigate that.

WHAT TO DO NOW:

My name is Richard Cole. I am a Solicitor who formerly worked at the IS carrying out director disqualification investigations. I am now the Directors Friend. Why not contact me to discuss on: +44(0) 1992 558411. The earlier that you speak with me the more that I can help.

Why not sign up for my seminar – http://www.breezeandwyles.co.uk/the-directors-friend-helping-you-on-the-road-ahead/? Only a month to sign up now!

Until the next time…

THE DIRECTOR’S FRIEND

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Broker Engagement Programme

In an effort to support brokers more, Breezeplus+ Legal Solutions has today launched its Broker Engagement Programme.  

The Programme is open to any broker who has more than five current remortgages being processed by us. This program will allow those brokers to obtain bulk updates on their cases quickly and efficiently. It will also relieve our Borrower focused telephone number to enable Borrowers to get through our system.  

In order to enable this to work the brokers on the programme will need to be able to centralise all of the information gathering through a single point of contact within their organisation to allow faster turnarounds on progress updates. 

If you are interested in joining the programme please contact us at Brendan.obrien@breezeplus.co.uk, paul.williams@breezeplus.co.uk or peter.jones@breezeplus.co.uk. We can then contact you to discuss the programme and also identify and allocate you a single point of contact.

 

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INCREASING COMPANY INSOLVENCIES

This is the next in the series of my blogs for the Director’s Friend.

THE LATEST STASTICS:  

On 28 April 2017, the latest quarterly insolvency statistics were released by the Insolvency Service (‘IS’). By comparison with the first quarter of 2016 company insolvencies have increased across the board.

  • Total company insolvencies have increased by 5.3%;
  • Creditors Voluntary Liquidations have increased by 5.4%; and
  • Compulsory Liquidations have increased by 2.8%.

This would appear to be a reversal of the general decline in corporate insolvencies since the first quarter of 2009. However, according to the IS a recent spike appears to be down to 1,796 personal service companies (PSC’s) entering creditors voluntary liquidation in the final quarter of 2016 following changes to claimable expenses rules.

In addition, individual insolvencies are also in the increase primarily driven by an increase in individual voluntary arrangements.

COMMENT:

 It would appear that from the position of the well-advised director that the number of director disqualification investigations may also increase going forward bearing in mind the increasing pool from which these investigations can commence.

In addition, prior to responding to director disqualification investigations the well-advised director would do best to consider whether there are any other investigations ongoing and whether or not there is a risk of the IS also seeking compensation on behalf of creditors as well.

My name is Richard Cole. I am a Solicitor who formerly worked at the Insolvency Service carrying out director disqualification investigations. I am now the Director’s Friend. Why not contact me to discuss on: +44(0) 1992 558411.

Until the next time…

THE DIRECTOR’S FRIEND

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Domestic Abuse Convention to be followed in UK.

On the 27th April 2017 The Preventing and Combating Violence Against Women and Domestic Violence (Ratification of Convention) Act 2017 received royal assent.

The purpose of this act was to ratify (make official) the UK’s agreement to comply with the Council of Europe Convention on Preventing and Combating Violence Against Women and Domestic Violence which is also known as the Istanbul Convention.  

Violence in any form is unacceptable and although domestic abuse is perpetrated against men and women, statistics show that the majority of victims are female. The convention is based upon the understanding that Domestic Abuse is committed by men against women because they are women and as a way to sustain male power and control. The convention places an obligation upon the state to prevent violence, protect victims and prosecute the perpetrators. It is stated that there can be no real equality between men and women if women experience gender based violence and that states that turn a blind eye and do not actively take steps to tackle these issues are complicit.

Countries that ratify the convention are obliged to raise awareness and educate and encourage people to challenge gender stereotypes, harmful traditional practices and misogynistic attitudes, establish shelters, hotlines, medical services, counselling, legal aid, criminalise and actively prosecute all forms of domestic abuse whilst ensuring that culture, tradition or so called honour are not regarded as a defence. The convention also requires countries to give an annual progress report until they are able to say that they are compliant with the convention.

For current victims of domestic abuse there is support available and it is important to get quick, reliable and easy to understand advice to know what your options are. Our family department is able to offer advice in relation to the full range of family law issues including domestic abuse, finances, divorce and children. Karen Johnson, one of the directors at Breeze and Wyles Solicitors Ltd is a Resolution Accredited domestic abuse specialist and Breeze and Wyles Solicitors Ltd are also members of the East Herts and Broxbourne Domestic Abuse Forum.

For more information and support contact us on 01992 558411 or complete our online enquiry form.

 

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Setting aside a Notice of Intention to appoint an Administrator by a Director (‘NOI’)

The Court of Appeal has given a recent judgement setting aside an NOI. That was in the following case: JCAM Commercial Real Estate Property XV Limited v. Davis Haulage Limited [2017] EWCA Civ 267 that is reported here: http://cases.iclr.co.uk/Subscr/search.aspx?docID=WLRD2017-265. Lord Justice David Richards gave the lead judgment.

BACKGROUND:

There were 4 NOI’s filed by the director. There was on the evidence no settled intention to appoint administrators.

NEW POINTS TO BE TAKEN:

  1. Notice is to be given and a copy of the notice filed in Court, only (emphasis added) if there is a person (i.e. a Qualifying Floating Charge Holder) with a prior right to appoint an administrator (per paragraph 56)
  2. If there is no person to whom notice must be given under Paragraph 26(1), there can be no interim moratorium (per paragraph 57);
  3. Lord Justice David Richards stated at paragraph 64:

The ground for the order to remove the copy of the notice from the court file is, in my judgment, the straightforward ground that the notice was invalidly given, because the statutory pre-requisite of a settled intention to appoint was not satisfied. The notice was not validly given under paragraph 26 nor was a copy of it validly filed with the court under paragraph 27, with the result that the interim moratorium was not validly invoked. To give a notice and file a copy with the court in these circumstances is no doubt, in a technical sense, an abuse of the court’s process…For the future, it will be clear, by reason of this court’s decision, that a conditional proposal to appoint an administrator does not entitle or oblige a company or its directors to give a notice under paragraph 26 of schedule B1.’

CAN SUCCESSIVE NOI’S BE FILED?

The 2010 case of RE: Cornercare Limited does not appear to have been overruled. Therefore, it would appear that successive NOI’s can be filed as long as there is a settled intention to appoint and genuine reasons for the successive NOI(s). Those reasons should be carefully recorded as a matter of course in case the Court is involved.

COMMENT:

 A settled intention to appoint administrators is essential.

I am a solicitor. If you have any questions please give me a call on +(0) 1992 558 411 or drop me an email on: Richard.Cole@breezeandwyles.co.uk

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The Director’s Friend – Helping you on the road ahead

Seminar 2nd proof_v6

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Ilott v Mitson – Inheritance Act Claims

to the dogs

Animal Charities succeed in Appeal to Supreme Court.

On the 15th March 2017 the eagerly anticipated judgement on the case of Ilott v The Blue Cross and Others from the Supreme Court was handed down.

Mrs Ilott made an application under the Inheritance (Provision for Family and Dependants) Act 1975 following the death of her mother Mrs Jackson. This legislation allows people to challenge inheritance provision if they can prove that it does not provide “reasonable financial provision”.

Mrs Ilott and her mother had become estranged 26 years prior to Mrs Jacksons death. When Mrs Ilott was 17 years old she had left home to live with and later marry a man that her mother did not like. Despite a few attempted reconciliations over the years, they had remained estranged and Mrs Jackson made in clear in the number of wills over that time, including her last, which stated that she did not wish to leave any of her estate to her daughter.

On her death Mrs Jackson left an estate worth approximately £486,000. Her will stated that other than a small amount to be left to the BBC benevolent fund, the remainder was to be left to three charities.

Mrs Ilott’s position was that she was living in Housing Association Accommodation and was reliant upon state benefits. She stated that she had not had any expectation of receiving anything from her mother’s estate.

When the case was first dealt with, the court awarded her £50,000. Mrs Ilott appealed and in July 2016 the Court of Appeal determined that she should have £143,000 to enable her to purchase her accommodation plus a further £20,000 as maintenance to be paid in such a way as to enable Mrs Illot to continue to receive her state benefits. The charities appealed to the Supreme Court.

The Supreme Court decision was to set aside the order made in the Court of Appeal and restore the original decision.

In the Judgement the court confirmed that in accordance with the legislation, unless the applicant is a spouse or partner “reasonable financial provision” is limited to what is reasonable for maintenance only. They confirmed that what is “reasonable” is an objective standard to be determined by the court and that what is “reasonable” did not extend to everything that the applicant wants but is also not limited to bare essentials.

The court confirmed that the appropriate level is case specific requiring the court to consider various factors and whilst maintenance might usually be considered to be income it could be dealt with by the provision of a lump sum.

The factors which the court have to take into account when dealing with these cases include;

  • The financial needs income and resources of the applicant(s) and any beneficiary.
  • Any obligation or responsibility which the deceased had towards to the applicant(s) and any beneficiary.
  • The size and nature of the estate.
  • Any physical or mental disability of the applicant(s) and any beneficiary.
  • Any other matter including conduct of the applicant(s) or any other person which the court may consider relevant.

The Supreme Court considered that the judge first hearing the matter, had taken into account all the factors that he was supposed to and was entitled to reach the decision that he had after weighing up all of the evidence. As such the Appeal Court should not have interfered and their decision should be set aside.

Whilst there had been much discussion surrounding this case and whether it would provide new hope to disgruntled relatives cut out of a deceased’s will or provide further challenges to our right to leave our property to whoever we want, the outcome has not been quite so dramatic. A testator’s right to deal with his estate as he wishes remains intact subject only to very limited claims that can be bought where “reasonable provision” has not been made so long as the Will itself is valid. More particularly the Supreme Court have essentially confirmed that unless the judge first hearing the matter reaches a decision no other judge given the same information would have come to, gets the law wrong, takes into account something he shouldn’t or fails to take into account something he should have, then the appeal court can not interfere with the award.

The reality of these cases is that the court retains much discretion in their objective assessment of the case. These are challenging cases which require an assessment of competing interests and are made all the more difficult due to the fact that emotions will understandably run high. Early advice is key and ideally every attempt should be made to reach an agreement without going to court subject to the strict time limits that are in place in which to bring a claim.

If you have any issues in relation to an inheritance dispute you can contact our family team. Our team of specialist family solicitors are able to offer appointments at our offices in Bishops Stortford, Hertford and Enfield and Nationally via telephone and Skype.

For more information and advice contact us on 01992 558411 or complete our online enquiry form.

Karen Johnson is Director and Family Mediator of Breeze and Wyles Solicitors Ltd. Karen is a highly skilled and experienced Family Solicitor with in excess of 15 years experience of working in Family Law. She is a Resolution Accredited Specialist in the fields of Domestic Abuse and Financial Matters. Karen is additionally a Family Mediator trained by and a member of the Family Mediators Association (The FMA).

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When tweets become twibels….

Facing up to the social media challenge for business

Every business using social media should get to grips with publishing law and advertising regulations if they are to avoid reputation-damaging incidents.

The reminder follows the news that opinion columnist Katie Hopkins has been refused leave to appeal against a recent High Court libel verdict, where she was found to have published defamatory tweets, or what’s been coined ‘twibel’.

Anyone using social media is a publisher, putting information out into the public domain, but unlike newspapers and book publishers, most businesses don’t have a good understanding of publishing law and how to avoid breaching it. Similarly, many businesses are not considering how their social media posts may breach advertising regulations, as the boundaries between paid-for advertising and other forms of communication become more blurred.

It’s the sort of confusion that led to a complaint being made that a tweet sent from the account of England football captain Wayne Rooney, as part of his sponsorship by Nike (UK), was not clearly marked as a marketing communication. The tweet read: “The pitches change. The killer instinct doesn’t. Own the turf, anywhere. @NikeFootball #myground pic.twitter.com/22jrPwdgC1”. Although in that case the Advertising Standards Authority found that Nike (UK) had not breached the code of conduct, saying the tweet was obviously identifiable as a Nike marketing communication, it may not always be clear to businesses where the line is drawn.

For Katie Hopkins, the tweets she posted that were found to be defamatory implied that prominent poverty campaigner and writer Jack Monroe had defaced a war memorial, in a case of mistaken identity. Monroe offered her the chance to publicly apologise or face legal action, but Hopkins refused.  When the case reached the High Court, the tweets were found to have caused ‘serious’ harm to Monroe’s reputation.  Hopkins must pay damages of £24000 to Monroe, together with Monroe’s legal costs.

In making the judgement, the court had to determine whether the tweets met the requirement for harm that is set out in the Defamation Act 2013 and experts say the ruling is the most important case to date involving libel on social media.

“Controlling social media content is a huge issue for business,” said Business Development Manager, Peter Jones of Breeze and Wyles Solicitors Ltd. “It’s a fast-moving arena and often posts, tweets, retweets and comments are the subject of instant decision-making.  When careful reflection isn’t part of the equation, it’s not surprising that it can lead to problems.  It is important that social media policies are kept under constant review and that everyone understands the boundaries they are operating within, through both the company’s marketing strategy and their terms of employment.

“Staff could also learn from the 26-point guide on how to use Twitter, published by the High Court as an appendix to its official ruling in the Hopkins case, which provides a summary of how the platform works. It makes for useful reading, even for those who think themselves experts, as a reminder of who will receive postings when tweeting, re-tweeting or replying.”

He added:  “It’s important to have a good crisis management plan in place as well, so that if the worst happens and a mistake is made, then everyone knows what to do if something inappropriate has been posted.  Taking swift action with a public retraction is a good start and will demonstrate a willingness to tackle the problem.  In the case of Katie Hopkins and her mistaken tweet about Jack Monroe, if she had been quick to correct herself and made a public apology that reached the original audience of her tweets, it’s quite likely the case would not have passed the necessary ‘serious harm’ test for defamation and the case may never have gone to court.”

This information is not intended as legal advice

 

References:

The 26-point guide to tweeting

Monroe and Hopkins [2017] EWHC 433 (QB)

https://www.asa.org.uk/rulings/nike-uk-ltd-a13-229986.html

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What our Clients say about us…

Conveyancing – Would just like to say thanks to you and Breeze and Wyles team for making this possible. I would also like to note that the online service provided was very helpful, being able to logon to the site and see what has been completed and what is still required I found to be very helpful and comforting.

Take care all the best for the future.

Mr L

 

 

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yet another happy client

Conveyancing – I just wanted to drop you a quick line to say thank you for all your assistance with the successful completion of the sale of my property.

It was a pleasure working with you on this and I will recommend you and use you again for future projects.

All the best…. have a fantastic week.

Thanks

Ms R

 

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