WIN ANNUAL LEGAL UPDATE 2014 · 2019-11-04 · TUPE reform – effective 31 January 2014 Things...

WIN ANNUAL LEGAL UPDATE

2014

DLA Piper

Manchester

1 May 2014

WELCOME

Ian Wood, Partner

DLA Piper

1 May 2014

EMPLOYMENT UPDATE

Helen Hall, Legal Director

DLA Piper

1 May 2014

Key TUPE Principles

Transfers employment

Protects terms and conditions

Protects against dismissal

Obligation to inform and consult

Provision of "employee liability information"

24/04/2014 18276960.PPT 4

TUPE reform – effective 31 January

2014

Things that have changed:

Renegotiation of terms from collective agreements 12 months after

transfer provided overall no less favourable

Confirmation of static approach to terms from collective agreement

Relocation can be an ETO reason

Clarification for SPC that services must be "fundamentally or

essentially the same"

Pre-transfer collective redundancy consultation can count for post

transfer redundancies

Micro businesses allowed to consult direct if no representatives in

place

Employee liability information 28 days before the transfer

5 24/04/2014 18276960.PPT 5

Employment Tribunals

Fees

Introduced 29 July 2013

Two stage fee structure – issue fee and hearing fee

Limited remission for employees with low income

Process

Judicial sift

ET procedure

24/04/2014 18276960.PPT 6

Type of Claim Issue Fee Hearing Fee

A £160 £230

B £250 £950

Employment Tribunals

Mandatory Pre-Claim Conciliation

Role of ACAS

Claimants must contact ACAS, who will attempt to promote a

settlement, before a claim can be submitted to the tribunal

1 month "prescribed period"

Financial Penalties for Employers

Up to £5,000

Where the case has "aggravating features"

24/04/2014 18276960.PPT 7

Impact?

Stated objective

to remove complexity and prevent spurious claims

Actual objective?

reduce numbers and save money!

Statistics

Quarterly data – Sept to Dec 2013

79% drop in overall claim numbers

63% drop in individual claims

MISSION ACCOMPLISHED?

24/04/2014 18276960.PPT 8

Protected Conversations and

Settlement Agreements

Protected Conversations

"Without Prejudice"

ACAS Code of Practice

Applies to normal unfair dismissal claims only

Settlement Agreements

Previously Compromise Agreements

24/04/2014 18276960.PPT 9

On the horizon

Redundancy Consultation – "Establishments"

Woolworths case referred to ECJ

Flexible Working (deferred to late 2014)

All employees

Code of Practice

Family Friendly Issues (on the horizon)

Shared parental leave

24/04/2014 18276960.PPT 10

CONTRACTS FOR DIFFERENCE

Electricity Market Reform

Assessing the choice between CfD and ROCs

Darren Walsh, Partner

Ian Wood, Partner

DLA Piper

1 May 2014

Renewables Obligation Certificates (ROC)

24/04/2014 18276960.PPT 12

Contracts for Difference (CfD)

24/04/2014 18276960.PPT 13

Transition to CfDs

24/04/2014 18276960.PPT 14

Phasing out the RO

From CfD introduction (mid 2014), until 31 March 2017 (grace

periods for those who miss the closure date):

new renewable generators can choose between RO and CfD

additional generating capacity >5MW at existing RO-accredited

generating station can apply for CfD ("dual scheme plant")

RO closes to new capacity 31 March 2017

CfD for new renewable generation post 31.3.2017

RO continues to support accredited capacity until 2037

Existing RO levels "grandfathered" from 31.3.2017, and

accredited capacity cannot transfer to CfD

From 2027, ROC values will be fixed at 2027 buy-out price +10% -

consultation on Fixed Price Scheme in Spring 2014

24/04/2014 18276960.PPT 15

Levy control framework (LCF)

LCF limits budget available for CfD, RO and FIT incentives

£7.6 billion to be allocated by 2020

Contracts for Difference (Allocation) Regulations, 2014

"first come, first served" for up to 50% of LCF budget

followed by competitive allocation/ "constrained process"

generation type maximum budgets

Which technologies will win / what scale?

24/04/2014 18276960.PPT 16

Levy Control Framework

Levy Control Framework - Upper Limits on Spend (£m)

(2011/12 prices)

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

3,300 4,300 4,900 5,600 6,450 7,000 7,600

24/04/2014 18276960.PPT 17

CfD overview

Private law fixed term contract between generator and "CfD

Counterparty"

CfD Counterparty – government owned limited liability company

Term = 15 years for most renewables

Price certainty through the Strike Price (indexed to Consumer

Price Index)

Top-up or claw-back payments made depending on the

difference between the Reference Price and the Strike Price

Funded by electricity suppliers through the Supplier Obligation

risk of late payment due to "pay when paid"

reconciliation payments

24/04/2014 18276960.PPT 18

CfD - aggregating differences

24/04/2014 18276960.PPT 19

Difference amount

Subject to transmission loss adjustments:

Strike Price minus Market Reference Price

Baseload MRP calculated by reference to a forward season

index/indices, set once every six months / year ahead reference

price once introduced

Intermittent MRP : reference price will be GB day-ahead hourly price

published under GB European market hub coupling requirements.

Formulae to adjust MRP during contract term to be developed

Multiplied by MWh of electricity produced in a given settlement

period – by reference to BSC Balancing Mechanism meters

Adjusted in the case of plant using variable renewable content

Separate system for private wires

Collateral (clause 31) for any -ve amount payable by Generator

24/04/2014 18276960.PPT 20

Eligibility criteria

Eligible technology which meets minimum size threshold – greater than 5

MW

Planning permission / Development Consent / Crown Estates agreement

for lease have been secured

Grid connection offer has been accepted

Declaration of no support under RO

Valid incorporation of the applicant

Government certification of valid supply chain plan (>300 MW)

Information required to enable EMR Delivery Body to complete standard

form CfD – eg project name, size, location, target commissioning date

Secondary legislation will set out appeals process to Ofgem re contested

Delivery Body decisions on eligibility and allocation.

24/04/2014 18276960.PPT 21

Timely delivery milestones

Contract Signature

(1 year)

Substantial Financial Commitment Milestone

Start Date Notice (Technology specific period

e.g. 1 year for onshore wind)

Target Commissioning Date

(Contract duration starts)

Start Date Notice

(Technology specific period

e.g. 1 year for onshore wind)

Longstop Date

24/04/2014 18276960.PPT 22

Termination triggers

Pre-Start Date (no compensation)

Failure to meet SFC Milestone & to fulfil initial CPs

Generator triggers termination events listed for post Start Date

Failure to fulfil further conditions precedent by Longstop Date

Post Start Date (generator compensates counterparty – sched. 3)

Generator insolvency

Failure to pay Net Payable Amount, or other Generator amount due

Breach of non-assignment provisions, change of plant ownership

Fraud of Generator director or senior manager

Breach of any credit support document

Breach of any metering obligations

Qualifying CIL permanently preventing construction/operations

24/04/2014 18276960.PPT 23

Conditions precedent

Compliance with statutory CfD eligibility criteria

Evidence of compliance with grid/DN connection requirements

Receipt of CfD Settlement Required Information

Acceptable generator collateral is agreed and in place

Plant commissioned to contractually agreed Installed Capacity

Metering equipment meets & is registered for BSC requirements

Provision of schematic diagram of Metering Points

Fuel Management & Sampling Agreement – for technology using

fuel with variable renewable content

24/04/2014 18276960.PPT 24

Flexibility to reduce capacity

Developers can reduce project capacity (without financial

penalty) :

by 25% between contract signature and Substantive Financial

Commitment

by a further 5% between SFC and the Longstop Date

DECC – Investing in renewable technologies- CfD contract

terms and strike prices : December 2013

24/04/2014 18276960.PPT 25

Supplier Obligation

Unit cost fixed rate (£/MWh) set by CP for each levy year (April –

March), based on estimated CfD costs for the year, considering

expected generation, reference and strike prices

Suppliers invoiced each business day for fixed rate x metered

supply in accordance with BSC – 5 business day to pay CP

CP pays generators within 28 days of relevant business day

CfD standard wording provides that CP liability to generators never

exceeds amounts contributed by supplier obligation

Generator confidence that they will be paid through:

21 days collateral on a rolling basis from suppliers : £190-280m by 2020

Annual lump sum payment to Reserve Fund : £60-290m by 2020

Insolvency reserve/mutualisation on exhaustion of supplier collateral :

£19-28 m by 2020

24/04/2014 18276960.PPT 26

Contracts for difference support PPAs

Finding a supplier to purchase electricity pursuant to a PPA

remains critical for bankability – secure off-take

Concerns re availability of PPA s : CfD Steering Group working on

Standard form PPA

Voluntary code of practice for PPA market

https://www.gov.uk/government/policy-advisory-groups/electricity-market-reform-emr-cfd-market-readiness-working-

groups#working-group-1-standard-contracts

Green Power Auction Market favoured by renewables developers

Government prefers Offtaker of last resort (OLR) – consultation on

how mechanism will work – DECC analysing feedback

Ofgem Mandatory Auctions/ "secure & promote" license condition

requiring big six to sell 25% of their power in wholesale markets to

enhance liquidity

24/04/2014 18276960.PPT 27

https://www.gov.uk/government/policy-advisory-groups/electricity-market-reform-emr-cfd-market-readiness-working-groups































Comparison of RO vs. CfD per MWh

(for 2014/15 but in 2012 prices)

Technology # ROCs Value of

ROCs

Base

price Total

CfD

Strike

price

CfD/ROC

Total

1 2 3 4 = 2+3 5 6 = 5/4

Onshore wind 0.9 £37.80 £47 £85.7 £100 117%

Offshore wind 2 £84.00 £47 £133 £155 117%

Solar 1.6 £67.20 £47 £115.8 £125 108%

Biomass conversion 1 £42.00 £47 £90 £105 117%

Wave 5 £210.00 £47 £262 £305 116%

Tidal 5 £210.00 £47 £262 £305 116%

Courtesy of Grant Thornton

24/04/2014 18276960.PPT 28

Completing the structure

Contractual suite of documents

PPA

PPA code of conduct

Contract for Difference

Fuel Management & Sampling Agreement ( for technologies

using fuel with variable renewables content)

Letter of credit or other collateral for Required Sum

Secondary legislation

CfD (Allocation) Regulations, 2014

CfD (Supplier Obligation) Regulations, 2014

SI designating limited liability company as CfD counterparty

24/04/2014 18276960.PPT 29

PROCUREMENT APPROACHES AND

CONTRACT CHOICE ON

CONSTRUCTION AND

ENGINEERING PROJECTS

Earle Brady, Legal Director

DLA Piper

1 May 2014

Introduction

We will cover:

procurement approaches

choice of standard form

contracts

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Procurement approaches

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Procurement

Single stage tendering

Two stage tendering

Early contractor involvement

18276960.PPT 33 24/04/2014

Single stage tendering

Advantage:

should get a fixed price

Disadvantage:

to the extent information is lacking, contractor will price a risk

element. Means employer is paying for risks which may or

may not ever materialise

in strong market, some contractors may not take part

18276960.PPT 34 24/04/2014

Two stage tendering

Advantages:

early appointment of the contractor potentially bringing forward

the completion date of the project

promotes a specific focus during the later stages of design on

issues of buildability and economic construction

early involvement of whole supply chain

18276960.PPT 35 24/04/2014

Two stage tendering

Disadvantages:

can be used to mask the inadequacy of design development

on a project

additional cost of pre-construction services fee

cost of second stage tenders tend to be higher because of

negotiation premiums and the inclusion of additional risk

transfer allowances

risk of contractor including substantial eleventh hour inclusions

for risk at end of the second stage, when the client has limited

alternative courses of action

18276960.PPT 36 24/04/2014

Early contractor involvement

Developed out of the Highways Agency's key principles; early

creation of delivery team, the Highways Agency used the NEC

ECC Target Cost option, with reimbursement of actual cost

and payment of bonuses

Highways Agency's objective was time certainty not cost

certainty

Advantages and disadvantages are as two stage tendering,

but to the extreme

18276960.PPT 37 24/04/2014

Construction/engineering contract

considerations

18276960.PPT

Time

Cost Quality

38 24/04/2014


considerations

Parameters Traditional Design and

Build

Time -

Cost

Quality -

18276960.PPT 39 24/04/2014


considerations

Type of contract Traditional Design and

Build

JCT Standard (+CDPS) (with CDPS)

JCT Intermediate (+CDPS) (with CDPS)

JCT Minor Works (+CDPS) (with CDPS)

JCT Design and Build -

NEC 3

MF/1 -

FIDIC Silver Book -

18276960.PPT 40 24/04/2014


considerations

Design responsibility Consultant Hybrid Contractor

JCT Standard (+CDPS) (CDPS) -

JCT Intermediate (+CDPS) (CDPS)

-

JCT Minor Works (+CDPS) (CDPS)

-

JCT Design and Build -

NEC 3

MF/1 - -

FIDIC Silver Book - -

18276960.PPT 41 24/04/2014

Standard form contracts

18276960.PPT 42 24/04/2014


JCT

NEC

FIDIC

MF/1

IChemE

18276960.PPT 43 24/04/2014


Familiarity with older versions of the JCT family can lead to

unsuitable preparation of the JCT contract documentation, failing

to take advantage of some of the newer provisions

NEC requires rigorous preparation of the contract

documentation, in view of the project-specific emphasis and the

consequential importance of the Contract Data and the Works

Information and Site Information. The transparency of NEC

means there is "nowhere to hide" if any of the contract

documentation is missing or unclear.

NEC – importance of project manager

18276960.PPT 44 24/04/2014

Minor works

JCT Practice Note 5 (series 2) stated that MW98 was "suitable

for contracts up to the value of £100,000 (2001 prices)", but the

current version of this Note "Deciding on the appropriate JCT

contract" does not set out any limits

It is generally recognised that it is the nature of the project,

rather than its value, that should be the deciding factor, and that

the form can be used successfully on larger projects provided

they are straightforward

18276960.PPT 45 24/04/2014

Intermediate contract

In practice, IFC is suitable for a very wide range of project

type and size. JCT Practice Note 6 (series 2) Deciding on the

Appropriate Form of JCT Main Contract, suggested limits of

12 months and £375,000, but these were to be treated as only

an approximate guide, and the more recent JCT Practice Note

Deciding on the Appropriate JCT Contract gives no such limits

The contract may also be unsuitable where the quantity or

type of work is largely unknown, or where the work is

extremely complex

18276960.PPT 46 24/04/2014

NEC3 ECC

Management Intensive

Contract, broadly only gives

benefits on projects of £2m

and above

18276960.PPT 47 24/04/2014

FIDIC, MF/1, IChemE

Process plant and

performance based contracts

Complexity and project

circumstances – not value

18276960.PPT 48 24/04/2014

PENSIONS UPDATE

Damien Garrould, Senior Associate

DLA Piper

1 May 2014

Asset-backed pension contributions

Agenda

What is an Asset-Backed Contribution ("ABC")?

Typical Structure

Reasons for ABCs

Employer and Trustee Considerations

Regulatory Environment

50 18276960.PPT 24/04/2014

What is an ABC?

Guidance from HMRC:

"arrangements that allow an employer to use non-cash assets to

underpin and/or act as a guarantee for regular income stream

payments to the pension scheme."

Guidance from the Pensions Regulator ("TPR"):

"a contractual funding arrangement under which an income

stream is provided to a scheme, usually via a special purpose

vehicle. That income stream is usually given a net present value

by the trustees and is treated as an asset, thereby reducing or

eliminating the scheme's deficit."

24/04/2014 18276960.PPT 51

Growth in ABCs

KPMG survey 2014 – Asset Backed Funding for Pensions

Total value

52 18276960.PPT 24/04/2014

Average transaction size

2012/1323 new ABCs

£2bn

TOTALto date

£7bn

£323m

£83m

2010

2013

ABC: A typical structure

53 18276960.PPT 24/04/2014

Sponsoring Employer(Limited Partner)

Asset

Pension Scheme(Limited Partner)

SPV(Scottish LP)

General Partner

Contribution

Subscription

Subscription

Management fee

Profit Share

Lease

Subscription

Rent Payment

acquired from sponsoring employer or other group

company

Reasons for ABCs

Asset remains in employer group

asset is available for use and realisation of "hidden" value

cash can be retained to grow business

usually no negative impact on balance sheet or income statement

Can enable parent support without direct connection

Can avoid trapped surplus

18276960.PPT 54 24/04/2014

Reasons for ABCs

Pension scheme deficit

reduced by the amount of "contribution"

reduce PPF levy payments?

can allow employer to push back length of deficit repair period

from 5-10 years to 15-20 years (HMRC limit 25 years)

Usually significant upfront tax benefits

Flexible structure, can be tailored to meet specific needs

18276960.PPT 55 24/04/2014

Employer Considerations

Banking restrictions - check structure permitted and will not

lead to breach of covenant

Corporate restrictions – articles of association

HMRC treatment

tax relief if meet "structured finance arrangement" conditions

clearance usually obtained

Prepare paper for Trustee explaining rationale

Costs

18276960.PPT 56 24/04/2014

Trustee Considerations

Trustee is making an investment - fiduciary duties

Appropriate advice is vital

Section 40 Pensions Act 1995 – restriction on employer-

related investments

Underpin required so that if structure becomes invalid:

contributions continue until alternative in place

Trustee reimbursed for any repayments needed

"Step-in rights" - trigger events and consequences

Consider TPR requirements

57 18276960.PPT 24/04/2014

The Pensions Regulator

"…generally the best form of support for a scheme is direct

and unconditional cash contributions"

The Pensions Regulator's statement on Employer Related Investments (November

2010)

Guidance - November 2013

Need to report ABCs to the Pensions Regulator

18276960.PPT 58 24/04/2014

IP UPDATE

The Social Media Minefield

Jim McDonnell, Senior Associate

DLA Piper

1 May 2014

The Social Media Minefield - legal risks

Intellectual property

Advertising regulations

Third party terms and conditions

Defamation and reputation

Confidentiality

Data protection and privacy policies

Employment policies

Ownership of employees' contacts

24/04/2014 18276960.PPT 60

Intellectual property


Third party terms and conditions

Defamation and reputation

Confidentiality

Data protection and privacy policies

Employment policies

Ownership of employees' contacts


The UK Code of Non-broadcast Advertising, Sales Promotion and

Direct Marketing (The Cap Code) and The UK Code of Broadcast

Advertising (The BCAP Code)

Advertising Standards Authority (ASA) regulates

content of broadcast and non-broadcast adverts,

sales promotions and direct marketing in the UK

ASA's growing remit over online activities…

March 2011 – Codes extended to non-paid for space under an

advertiser's control – ie its main website and social media pages

March 2011 – User Generated Content is advertising if incorporated

February 2013 – CAP Code extended to Online Behavioural

Advertising

24/04/2014 18276960.PPT 61

24/04/2014 18276960.PPT

Testimonials and endorsements

Advertising rules

Not materially misleading

Genuine (with documentary evidence/contact details of author)

Must not be used without express permission (unless accurate

statements from a published source)

Must relate to the advertised product

Platform T&Cs

Twitter – Do not imply affiliation or partnership with Twitter, other

organisations or individuals without permission

Facebook – Can make a reference to Facebook to describe

Facebook presence but can't suggest affiliated with, sponsored

by or endorsed by Facebook

62

Testimonials and endorsements cont.

ASA Adjudication – June 2012

Two tweets for Nike posted in January 2012 on Twitter:

Wayne Rooney – "My resolution - to start the year as a

champion, and finish it as a champion #makeitcount

gonike.me/makeitcount "

Jack Wilshere – "In 2012, I will come back for my club - and be

ready for my country. #makeitcount gonike.me/Makeitcount."

ASA Adjudication – September 2013

A tweet for Nike on Twitter from the official account of Wayne

Rooney - "The pitches change. The killer instinct doesn't. Own

the turf, anywhere @NikeFootball #myground

pic.twitter.com/22jrPwdgC1."

24/04/2014 18276960.PPT 63

Testimonials and endorsements

ASA Adjudication – complaint upheld, January 2013

A tweet for Publishers Clearing House was posted on Twitter

from the official account of Keith Chegwin – "Just a quickie: Log

on to pchprizes.co.uk 4 Your chance 2 win £100k plus Win

£2,500 a week 4 life. Have a go X "

If using testimonials and endorsements…

Ensure posts are obviously identifiable as marketing communications

Use hashtags like #ad and #spon

Ensure contracts clearly cover what can and can't be stated/posted

Ensure customer feedback isn't edited or used in a misleading way

24/04/2014 18276960.PPT 64

User Generated Content

Advertising Rules

Marketing communications must not contain anything that is likely to

cause serious or widespread offence.

The Codes will apply where an advertiser incorporates User Generated

Content (UGC) into their own marketing communications

Compliance will be judged on the context, medium, audience, product

and prevailing standards.

Platform T&Cs

Facebook – Ads must not offend users, promote illegal activity, insult or

harass others, contain hate speech, assert or imply personal

characteristics e.g. race, sexual orientation, age or financial status.

Instagram – Must not post discriminatory, unlawful, hateful or sexually

suggestive content

Twitter – Must not include content/language that could offend or shock

24/04/2014 18276960.PPT 65

User Generated Content cont.

ASA Adjudication – complaint part upheld, May 2013

Hi Spirits Facebook status - "What are your Fireball stories from

the weekend (or any weekend)? Best ones win Fireball freebies!"

Responses posted on Facebook page included:

"Last week went to Las Vegas and saw guns n roses play for 3 and a

half hours. Thanks to the bottle of fireball I had beforehand I only

remember the first 7 songs";

"HAD FIREBALL + APPLE J AND SPEWED IN A BUSH. FREEBIE?"

If encouraging/incorporating user generated content…

Ensure your T&Cs cover all platforms and contain terms on UGC –

what users can do, assurances it's their own ©, how you will use it etc

Actively monitor UGC on own website and across all platforms – ensure

no breach of the Codes is incorporated into your advertising

24/04/2014 18276960.PPT 66

Recycling content on social media sites

Agence France Presse v. Morel, U.S. District Court for the

Southern District of New York, No. 10-02730.

One of the first big tests of IP law involving social media in USA.

January 2013 - a Judge found two news organisations improperly

used images a freelance photojournalist posted to Twitter minutes

after Haiti earthquake. Defendants argued Twitter's terms of

service granted it the right to use the images.

The Judge held that whilst terms of service allow the reposting and

rebroadcasting of users' images in certain circumstances, such as

"retweeting" them, it does not grant a licence for commercial use.

November 2013 – Morel awarded $1.2m damages (after

reassessment).

Reminder of the importance of understanding the T&Cs and

how they relate to what you are using the platform for.

24/04/2014 18276960.PPT 67

COFFEE BREAK

DLA Piper

Manchester

1 May 2014

COMMERCIAL UPDATE

Claire Edwards, Legal Director

DLA Piper

1 May 2014

Introduction

Unenforceable penalty? El Makdessi v Cavendish Square Holdings BV and another [2013] EWCA Civ 1539

Commercial Agents - Governing law -United Antwerp Maritime Agencies (Unamar) NV v Navigation Maritime Bulgare, (Case C-184/12) [2013] EUECJ

Retention of Title and Action for the Price - Caterpillar (NI) Limited (formerly known as FG Wilson (Engineering) Limited) v John Holt & Company (Liverpool) Limited [2013] EWCA Civ 1232

Limitation of liability - Glencore Energy UK Ltd v Cirrus Oil Services Ltd [2014] EWHC 87 (Comm)

24/04/2014 18276960.PPT 70

Penalties

El Makdessi v Cavendish Square Holdings BV and another [2013] EWCA Civ 1539

• Genuine pre-estimate of loss v penalty

• Too rigid

• Broader test….extravagant and unconscionable…..commercial justification

• On the facts - not genuine pre-estimates of loss

• "extravagant and unreasonable."

• "That is not necessarily conclusive. A commercial justification may mean that a clause which is not a genuine pre-estimate is not penal." [Lord Justice Christopher Clarke at paragraph 117]

24/04/2014 18276960.PPT 71

Penalties

Relevant parties

• Seller

• selling some shares

• remainder by call/put option later

• Buyer – Cavendish

• Company – the company whose shares were being sold

24/04/2014 18276960.PPT 72

Penalties

24/04/2014 18276960.PPT 73

Restrictive covenants

Deferred consideration payments potentially forfeited (clause 5.1)

put option / call option and different valuation (clause 5.6)

Penalties

Some of the issues

• extravagent and unreasonable?

• recoverable damages

• ability of Company to claim

• likely sum forfeited

• extent of breach

• kinds of loss and range of loss

• different valuations under put and call options

• not genuine pre-estimate of loss

• Commercial justification?

24/04/2014 18276960.PPT 74

Penalties

Deterrence

• Forfeit/recovery

• Double jeopardy

• Trigger

• Actions and consequences

Different structure

24/04/2014 18276960.PPT 75

Penalties

"…'Extravagant' and 'unconscionable' were terms originally used to

characterise a provision which required far too high a payment in the

event of breach. That it did so offended the conscience of equity,

which treated it as penal - because its function was not to

compensate but to deter breaches of obligations - and unenforceable

(save as to the amount of the proved damage). Nowadays, when a

term which provides for excessive payment on breach may be valid if

it has a proper commercial justification, the term "unconscionable"

would, perhaps more appropriately be used for a clause which

provides for extravagant payment without sufficient commercial

justification. Such a clause is likely to be regarded as penal and

deterrence its predominant function, on the basis that if it requires

excessive payment and lacks commercial justification for doing so,

there is little room for any conclusion other than its function is to deter

breach or, to put it positively, to secure performance". [Lord Justice

Christopher Clarke at paragraph 125]

24/04/2014 18276960.PPT 76

Penalties

Lessons

not just genuine pre-estimate of loss

consider commercial justification

look out for double counting

consider structuring the arrangement

differently.

24/04/2014 18276960.PPT 77

Commercial Agents - Governing law

United Antwerp Maritime Agencies (Unamar) NV v Navigation Maritime Bulgare, (Case C-184/12) [2013] EUECJ

Chosen governing law

• Member State

• implemented Directive

Forum court

• different Member State

• give protection going beyond that provided for by the Directive

Can forum apply its agency rules on the basis that they are mandatory?

24/04/2014 18276960.PPT 78


Belgian agent

Bulgarian principal

Governing law – Bulgarian

Arbitration in Bulgaria

Belgian law that "…any activity of a commercial agent whose principal place of business is in Belgium shall be governed by Belgian law and shall be subject to the jurisdiction of the Belgian courts".

Proceedings brought by agent in Belgium

24/04/2014 18276960.PPT 79


ECJ decision

Forum court to assess

Rome Convention

Rome I

Strict interpretation of Article 7(2) Rome Convention

A reminder

24/04/2014 18276960.PPT 80


"Articles 3 and 7 (2) of the [Rome Convention]… must be interpreted

as meaning that the law of a Member State …which meets the

minimum protection requirements [in the agency directive]…which

has been chosen by the parties…may be rejected by the court of

another Member State before which the case is being brought in

favour of the law of the forum, owing to the mandatory nature, in

the legal order of that Member State, of the rules governing the

situation of self employed commercial agents, only if the court

before which the case has been brought finds, on the basis of a

detailed assessment, that, in the course of that transposition, the

legislature of the State of the forum held it to be crucial, in the

legal order concerned, to grant the commercial agent protection

going beyond that provided for by that directive, taking account

in that regard of the nature and of the objective of such mandatory

provisions." [Emphasis added]

24/04/2014 18276960.PPT 81

Retention of Title and Action for the

Price

24/04/2014 18276960.PPT 82

•Action for the price

•Retention of Title

Caterpillar (NI) Limited

(formerly known as FG Wilson (Engineering)

Limited) v John Holt &

Company (Liverpool)

Limited [2013] EWCA Civ

1232


Price

24/04/2014 18276960.PPT 83

Action for the price

• Section 49 (1)

• "Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods" [Emphasis added]

• Clause

• "….Notwithstanding delivery and the passing of risk in the products, title shall not pass to Buyer until Seller has received payment in full for the products and all other goods or services agreed to be sold by Seller to Buyer for which payment is then due. Until such time as title passes, Buyer shall hold the products as Seller's fiduciary agent and shall keep them separate from Buyer's other goods. Prior to title passing Buyer shall be entitled to resell or use the products in the ordinary course of business and shall account to the Seller for the proceeds of sale. If the Buyer fails to comply with a demand from the Seller to return products to which title has not passed, Seller may forthwith enter any premises where the products are stored and repossess them" [Emphasis added]


Price

Buyer (Holt (Liverpool)) on-sold

Did property pass to the buyer?

• Dissenting opinion – Lord Justice Longmore

• holds versus on-sells

• relationship of the parties clause

• what sum is held for the seller?

• capacity and intention

24/04/2014 18276960.PPT 84


Price

24/04/2014 18276960.PPT 85

Title did not pass – why?

• not pass

• keep separate and fiduciary agent

• proceeds

• Capacity on sub-sale

Relationship clause?

Appeal


Price

24/04/2014 18276960.PPT 86

• retention of title - s49(1) SGA; s49(2) SGA; proceeds provisions

• on sales - allow?

• relationship clause – didn't override

• seller's rights – what does seller want?; balancing risks

• security – other forms?

Some lessons

for a seller

Limitation of liability

Glencore Energy UK Ltd v Cirrus Oil Services Ltd [2014] EWHC 87 (Comm)

• Section 50(2) and (3) SGA – claim for damages for non-acceptance of goods

• Conclusion – "lost profits" and "loss of anticipated profits" does not cover a claim under s50(2) and (3) SGA.

24/04/2014 18276960.PPT 87


Glencore buying from

Socar

Glencore selling to

Cirrus

Cirrus selling to TOR

24/04/2014 18276960.PPT 88


Clause

"…..in no event….shall either party be liable to the other…in

respect of any indirect or consequential losses or expenses

including (without limitation) if and to the extent that they might

otherwise not constitute indirect or consequential losses or

expenses, loss of anticipated profits,…..business receipts or

contracts or commercial opportunities, whether or not foreseeable"

Hadley v Baxendale

s50(3) Sale of Goods Act 1979

"Where there is an available market for the goods….the measure

of damages is prima facie to be ascertained by the difference

between the contract price and the market or current price at the

time or times when the goods ought to have been accepted or (if

no time was fixed for acceptance) at the time of the refusal to

accept".

24/04/2014 18276960.PPT 89


S50 NOT calculating loss of profit

Judge's illustration

• goods cost the seller £100;

• he sells them onto the buyer for £100;

• but the market price at the time of the buyer's breach is £50.

• If the buyer had accepted the goods then the seller would not have made any profit.

• On breach – s50 – prima facie loss £50

24/04/2014 18276960.PPT 90


24/04/2014 18276960.PPT 91

"…no-one who understood the way in which the Sale of Goods Act works, would refer to this measure of loss as "lost profits" or "loss of anticipated profits" " [Mr Justice Cooke at paragraph 100]

the clause "cannot operate to exclude the loss claimed here" [Mr Justice Cooke at paragraph 100]

"if [it had been loss of profits and they were excluded] it would mean that Glencore could recover nothing in respect of Cirrus Oils' repudiation of the contract since it suffered no out of pocket losses at all. This is an unlikely and uncommercial result which would require extremely clear words, which are not to be found in this contract" [Mr Justice Cooke at paragraph 101 ]


24/04/2014 18276960.PPT 92

Lesson

• clear wording

• "lost profits" or " loss of anticipated profits" didn't cover the claim here

LITIGATION UPDATE

Jonathan Eatough, Partner

DLA Piper

1 May 2014

Jackson Reforms – key changes as of

1 April 2013

Contingency fees or damages-based agreements

Lawyers can conduct litigation in return for a share of damages. Defendants are

liable for costs only on a conventional basis; the Claimant must pay any shortfall

out of damages.

Conditional fee agreements (CFAs) and after-the-event (ATE) insurance

CFA success fees and ATE insurance premiums are not recoverable from the

losing party where the arrangements have been entered into on or after 1 April

2013.

Proportionality

There is a new test of proportionality, requiring costs to bear a reasonable

relationship to the value and complexity of the claim, any additional work

generated by the conduct of the paying party, and any wider factors involved in

the proceedings (for example, reputation or public importance).

Part 36 offers

An additional sanction applies to Claimants' offers, equivalent to 10% of

damages, tapered down for larger claims.

24/04/2014 18276960.PPT 94

Jackson Reforms – the Headlines

Disclosure

The presumption in favour of standard disclosure has been replaced by a "menu"

of disclosure options in multi-track cases. To assist the court in deciding on the

appropriate order, two weeks before the first CMC parties must file and serve

reports describing what documents exist, where and how they are stored, and

the likely costs of giving standard disclosure.

Experts

Parties seeking permission for expert evidence must identify the issues that the

evidence will address and provide a cost estimate. Concurrent expert evidence

(or "hot-tubbing") may be adopted at the court's direction.

Witness statements

Courts have been given express powers to: identify or limit the issues for witness

evidence; identify which witnesses may give evidence; and limit the length of

witness statements.

24/04/2014 18276960.PPT 95

Jackson Reforms – the Headlines

Costs management

Judicial costs management applies to multi-track cases commenced after 1 April

2013, with the exception of the Commercial Court and claims for more than £2

million in the Chancery Division, Technology and Construction Court, and

Mercantile Courts. When assessing recoverable costs, the court will not depart

from a party's agreed or approved budget "without good reason".

Case Management

The rules on granting relief from sanction for breaches of rules or court orders

have been amended in order to encourage a stricter approach.

24/04/2014 18276960.PPT 96

Extended stricter case management

powers

Case management

CPR 3 now has two sections: case management and costs management.

The court now has an express discretion to contact the parties to monitor

compliance with directions. (CPR 3.1(8));

Relief from sanctions - CPR 3.9(1) on an application for relief from

sanctions, the court will consider all the circumstances of the case, to enable

it to deal justly with the application. Express requirement to consider the

need:

for litigation to be conducted efficiently and at proportionate cost;

to enforce compliance with rules, practice directions and court orders.

24/04/2014 18276960.PPT 97

Relief from sanctions

In Fred Perry (Holdings) Ltd v Brands Plaza Trading Ltd

and another [2012] EWCA Civ 224, Jackson LJ cautioned

that, after 1 April 2013, litigants who "substantially

disregard court orders or requirements of the CPR will

receive significantly less indulgence than they have to

date".

24/04/2014 18276960.PPT 98

Relief from sanctions – Mitchell v News

Group Newspapers

The leading case that shows that Jackson LJ meant what he said:

Andrew Mitchell MP v News Group Newspapers Ltd [2013] EWCA

Civ 1537

Late filing of case budget.

An application for relief against the sanction under CPR 31.14 (court

fees only) was not granted - debarred from recovery of future legal

costs.

Relief from sanctions is unlikely to be granted unless either:

breach is trivial and the application for relief is made promptly; or

there is a good reason for non compliance.

24/04/2014 18276960.PPT 99

Relief from sanctions – supporting

cases to the Mitchell approach

Durrant v Chief Constable of Avon and Somerset Constabulary -

[2013] EWCA Civ 1624

Late filing of witness statements - from 1 day late to a couple of days

before trial.

Court of Appeal set aside the first instance decision (which did not

have benefit of Mitchell decision) - Defendant debarred from relying

on the late evidence.

Trivial - had the statements been served a day late only, the court

may have deemed this a trivial breach attracting relief from

sanctions.

Thavatheva Thevarajah v Riordan and Ors – [2014] EWCA Civ 14

Unless order – provide information by deadline or defence struck

out.

24/04/2014 18276960.PPT 100

Relief from sanctions – supporting

cases to the Mitchell approach

Mctear and another v Engelhard and others [2014] EWHC 722 (Ch)

The High Court refused to grant retrospective time extensions or

give late permission to adduce expert evidence or further amend the

defence.

The defence was not struck out.

Trivial – the court noted 50 minutes late service seems trivial but the

additional facts in the case prevented relief from sanction (700

exhibits to the witness statement including documents that had not

been disclosed).

24/04/2014 18276960.PPT 101

Relief from sanctions – proportionality

by reference to interest of justice?

Chatswell Estate Agents Ltd v Fergies Properties SA and another [2014]

EWHC 438

The High Court granted relief from sanction under CPR 3.9 for failure to

serve its witness statement on time - both parties given an extension of 7

days.

Claimant had alleged that it had been unable to serve its witness evidence

because the defendant failed to give proper disclosure.

SXK v West Hertfordshire Hospitals NHS Trust [2014] EWHC QB

The High Court granted relief from sanction in relation to the late service of

lay and expert evidence and a retrospective extension.

Good reason – a genuine dispute arose after the order was made requiring

new evidence to be obtained.

24/04/2014 18276960.PPT 102

Relief from sanctions - What can a

debarred defendant do?

1. Appeal – the court has already considered that the

trivial/good reason threshhold has not been met, Court of

Appeal has taken hard-line approach as per Mitchell.

2. Settle – may be more effective to settle although you are

now on the back-foot.

3. Continue – Claimant still has the burden to prove the claim.

4. Think ahead - always apply for an extension of time where it

is known that the time limit on an order will be exceeded,

otherwise risk Mitchell territory as outcome.

24/04/2014 18276960.PPT 103

Issue a second claim – a loophole to

Mitchell?

Circumvent Mitchell by simply suing again?

Test for striking out a re-issued claim as an abuse of process

is more favourable to claimants than the Mitchell criteria.

Michael v Middleton [2013] 6 Costs L.R. 899 - HHJ Cooke

refused relief from sanction of strike out under an unless order

assuming a second claim would be brought successfully.

Hall v Ministry of Defence [2013] EWHC 4092 – Claimant

failed to serve proceedings in time and reissued.

Undermine Mitchell focus of court resources and court users

generally?

Moot point – if tested in Court of Appeal = bridging of the gap?

24/04/2014 18276960.PPT 104

Challenges facing lawyers post-

Mitchell

Professional negligence claims

Mitchell – "overlooking a deadline whether on account of overwork

or otherwise" is unlikely to be 'trivial' and nor a good reason.

Chatswell – the court noted that an innocent party should not rely

on another party's failure or communication of a likely failure as an

excuse not to abide by a deadline.

Tactical Manoeuvres

Summit navigation and others v Generali Romania Asigurare

[2014] EWHC 398 – High Court warned defendants against relying

on Mitchell to launch 'unreasonable' opposition to minor timetable

changes, ignoring their duty to co-operate and reduce the cost of

litigation.

24/04/2014 18276960.PPT 105

Practical points to take

Compliance with time limits and court directions is vital – work

pressure and time constraints are not a 'trivial' breach.

If time is running out, apply in advance for an extension of time

or to vary directions, particularly if it will affect trial dates.

Be reasonable in agreeing a reasonable request for an

extension of time or variation of directions.

Reissue claim?

24/04/2014 18276960.PPT 106

ADEQUATE PROCEDURES

Is your company doing enough?

John Gollaglee, Legal Director

DLA Piper

1 May 2014

Bribery Act 2010

Strict liability offence: FAILING TO PREVENT BRIBERY

Section 7: A relevant commercial organisation ("C") is guilty of an

offence under this section if a person ("A") associated with C

bribes another person intending to obtain or retain business for C

or to obtain or retain an advantage in the conduct of business for C

The defence: HAVING ADEQUATE PROCEDURES IN PLACE

TO PREVENT BRIBERY

But it is a defence for C to prove [on the balance of probabilities]

that C had in place adequate procedures designed to prevent

persons associated with C from undertaking such conduct

24/04/2014 18276960.PPT 108

The Guiding Principles

Proportionate procedures

Top level commitment

Risk assessment

Due diligence

Communication and training

Monitoring and review

24/04/2014 18276960.PPT 109

The Stats

Control Risks conducted a compliance survey with senior

lawyers and compliance officers of 300 companies around the

world in 2013

Only 50% had due diligence procedures in place when selecting

local business associates

35% did not have formal policy statements forbidding bribes

47% did not have policies or statements banning ‘facilitation

payments’

91% had no specialised anti-corruption training for employees in

high-risk areas

74% had no anti-corruption training programmes in general

Only 40% had whistleblowing lines

24/04/2014 18276960.PPT 110

Monitoring and Review

Nearly 3 years since implementation of the Bribery Act

Journey to adequate procedures should ideally have been

started and completed

Now is the time to look back – would your procedures be

considered adequate in the event of a prosecution?

Consequences of conviction: fines up to 400% of gross profit;

perpetual debarment from public contracts; imprisonment up to

ten years for individuals; harm to reputation

Consider a health check under the protection of privilege

24/04/2014 18276960.PPT 111

DEFERRED PROSECUTION

AGREEMENTS – A NOVEL APPROACH

TO CORPORATE OFFENDING

Introduction

Introduced by Crime and Courts Act 2013 on 24 February

2014

Schedule 17

"a new enforcement tool to deal with economic crime committed by

commercial organizations"

a potential alternative to prosecution

only be available to a "designated prosecutor", currently the SFO

and DPP

subject to judicial approval (at two stages)

Background

response to the heavily criticised "civil settlements" in earlier high

profile cases

structured in such a way so that they receive far more judicial

attention prior to approval

24/04/2014 18276960.PPT 113

DPA Overview

A Court approved agreement between a prosecutor and

a company charged with or suspected of certain criminal

offences to suspend criminal proceedings

Agreement will set out conditions such as payment of a

financial penalty or compensation, or co-operation with

any future prosecution of individuals, improvement of

compliance systems

If a breach any of the conditions the prosecution has the

ability to resume any investigation or prosecution

Considerable discretion to the Prosecutor as to

availability and conditions

24/04/2014 18276960.PPT 114

Key Points

DPAs may be entered into with corporates, partnerships and

unincorporated associations but not individuals

Whilst DPA negotiations are on-going no law enforcement

body may prosecute an organisation in respect of the alleged

offence

Once a court approved DPA is in place no proceedings may

be brought against the organisation in respect of the alleged

offence unless it can be shown that inaccurate, misleading or

incomplete information has been provided

Following the expiry of a DPA, proceedings will be officially

discontinued. No convictions

24/04/2014 18276960.PPT 115

Key Points Continued

The Director of Public Prosecutions, Director of the Serious

Fraud Office or any other prosecutor identified by an order of

the Secretary of State may exercise the power to enter into a

DPA

DPAs will require court approval at preliminary and final

hearings

Agreement must contain a statement of agreed facts relating

to the alleged offence

Agreement must contain an expiry date (though they may be

terminated before this date)

24/04/2014 18276960.PPT 116

Key Points Continued

The Act contains a non-exhaustive list of sanctions that

may be imposed on a defendant including:

the payment of financial penalties,

a disgorging of profits,

payment of compensation to victims

payment of costs to prosecutors,

charitable donations,

implementation of compliance programmes,

requirement to cooperate in any investigation,

if breached the prosecutor may either require the company to

remedy that breach or to terminate the DPA,

may be varied with court consent (but both parties must be in

agreement as to need to vary).

24/04/2014 18276960.PPT 117

DPA Code of Practice

New code as required by Act

Released 14 February 2014

SFO/ CPS to have regard to code

when negotiating DPA

applying for approval of DPA

overseeing approved DPA (variation, breach, termination and

completion)

sixteen parts to consider

factors in favour and against suitability of DPA

24/04/2014 18276960.PPT 118

Principal Consideration for the

Prosecutor

Is a DPA Available?

Two stage test - evidential and public interest

evidential not only the standard of Code for Crown Prosecutors

" there is at least a reasonable suspicion based upon some

admissible evidence that P has committed the offence, and there

are reasonable grounds for believing that a continued investigation

would provide further evidence within a reasonable period of time,

so that all evidence together would be capable of establishing a

realistic prospect of conviction in accordance with the Full Code

test"

DPA as opposed to prosecution serves the public interest

24/04/2014 18276960.PPT 119

To which offences do DPA's apply?

Not just the Bribery Act

Theft Act 1968 offences

Customs and Excise Management Act 1979

Forgery and Counterfeiting Act 1981

Value Added Tax Act 1994

Financial Services and Markets Act 2000

Proceeds of Crime Act 2002

Companies act 1985 and 2006

Fraud Act 2006

Money Laundering Regulations 2007

24/04/2014 18276960.PPT 120

Initial Thoughts

DPA's are a matter for prosecutor discretion and subject

to their appetite

Application of both evidential and public interest tests are

fraught with difficulty

Ability to prosecute in most instances are limited by

"directing will and mind" test

Factors in favour and against DPA are finely balanced

Significant incentive for public procurement

Costs and penalties significant

Disclosure to other regulators overseas is a risk

Full and frank disclosure of privileged internal

investigation 24/04/2014 18276960.PPT 121

How to respond?

Keep updated

Lack of enforcement action does not lessen the potential

impact for corporate breach

"Risk assessment " of what offences you may be at risk

from and re-visit compliance regime

Rogue senior managers increase the risk- good

corporate governance is essential

Increased vigilance on whistleblowers

Plan for investigation

What does your insurance cover?

24/04/2014 18276960.PPT 122

CORPORATE CRIMINALITY – AN

UPDATE

24/04/2014 18276960.PPT 124

Corporate Manslaughter

The Corporate Manslaughter and Corporate Homicide

Act 2007

5 successful convictions

Largest fine to date £480,000

24/04/2014 18276960.PPT 125

Fines for Health and Safety and

Environmental Offences

R -v- Sellafield Limited and R -v- Network Rail

Infrastructure Limited [2014] EWCA Crim 49

R -v- Southern Water Services Limited [2014] EWCA

Crim 120

24/04/2014 18276960.PPT 126

Sentencing Council Environmental

Offences Definitive Guideline

Guideline for offenders that are organisations

Offences committed under the Environmental Protection

Act 1990 (section 33) and Environmental Permitting

(England and Wales) Regulations 2010 (regulations 12

and 38(1), (2) and (3))

Comes into effect on 1 July 2014

24/04/2014 18276960.PPT 127

The Coroners (Inquests) Rules 2013

Came into force 25 July 2013

Time limits

Disclosure

Reports on Action to Prevent Future Deaths

24/04/2014 18276960.PPT 128

Other Changes and Developments

Reporting of Injuries, Diseases and Dangerous

Occurrences Regulations 2013

The Enterprise and Regulatory Reform Act 2014

The use of The Proceeds of Crime Act 2002

CORPORATE / TAX UPDATE

Elia Montorio, Partner

Stephen Jones, Legal Director

DLA Piper

1 May 2014

Corporate

Agenda

Transactional trends

Share buy-back regime

Legislative developments

Case law developments

24/04/2014 18276960.PPT 130

Transactional trends

M & A activity

IPO markets

ESS schemes

Re-basing of management equity plans

Other thoughts

24/04/2014 18276960.PPT 131

Employee shareholder status

A new form of employment contract aimed at minority

(less than 25%) interest in the company

individual is "given" minimum £2,000 of shares

in return for giving up statutory employment rights

right to bring an unfair dismissal claim

right to receive statutory redundancy

right to request flexible working

right to request time off for training

maternity leave return to work – longer notice required

24/04/2014 132 18276960.PPT

ESS: Tax treatment

Income tax exemption on first £2,000 worth of shares

Initial income tax charge (and possibly NICs) if shares

worth more than £2,000

Complete exemption from CGT on disposal of shares (up

to £50,000 worth at acquisition) = better than

entrepreneur's relief

24/04/2014 133 18276960.PPT

Share buy-back regime

Off-market buy-backs – ordinary resolution

De minimis exception

Treasury shares

Health warning

24/04/2014 18276960.PPT 134

Legislative developments

The Mental Health (Discrimination) Act 2013

changes to model articles

need to update old articles?

Beneficial ownership of companies

BIS consultation

24/04/2014 18276960.PPT 135

Case law developments

Penalty clauses

Imam – Sadeque

Cavendish Square

Eurosail

balance sheet insolvency test

24/04/2014 18276960.PPT 136

INSOLVENCY OF YOUR

DEBTORS

Why you should take an interest

Tony Potts, Associate

DLA Piper

1 May 2014

Insolvency of Your Debtors

What options are available to you when faced with the

insolvency or potential insolvency of your debtors?

Pre Administration

Winding Up Petition

Statutory Demand

Contractual Rights

Post Administration

SIP16

Initial Creditors Meeting

Administrators Proposals

Creditors Committee

Challenges to conduct of administration

24/04/2014 18276960.PPT 138

Pre Administration

Pre Administration

Statutory Demand

Section 123(1)(a) of the Act

Debt must be:

over £750

due and payable

Failure to pay the amount demanded within three weeks is

evidence that a debtor is unable to pay its debts

Consequences to a statutory demand?

breach of banking covenants?

termination event under other contracts?

24/04/2014 18276960.PPT 139

Pre Administration

Winding Up Petition

A court may wind a company up if, amongst other things, the

company is unable to pay its debts (s122(f) of the Act)

Consequences

disposition of company property after petition potentially void

likely event of default under facility agreements & contracts

time, expense, inconvenience of dealing with the petition

directors unable to appoint administrator without applying to court

Options available to Debtor

Settle the debt owing and get petition withdrawn

(before advertisement)

Company Voluntary Arrangement (CVA)

24/04/2014 18276960.PPT 140

Pre Administration

Contractual rights

Retention of Title

also known as a Romalpa clause

seller retains title to goods supplied until the full purchase price has

been received

Consider if retention of title provisions are robust

is legal and beneficial interest retained?

are goods annexed to premises?

is stock stored separately?

Consider terminating the license to deal

Mixed goods

24/04/2014 18276960.PPT 141

Post Administration

Post Administration

Statutory moratorium

paragraphs 42 to 44, Schedule B1 to the Act

creditors prevented from bringing claims

without prior consent of court or administrators

claims are not extinguished

Put the administrator on notice of your claim

Consider if you have a ransom position to exploit

24/04/2014 18276960.PPT 142

Post Administration

Pre-packaged administration sale

SIP 16 obligations

Administrator must send report to creditors following a pre-pack

sale including details of:

identity of the purchaser

consideration and payment terms

connection between buyer and directors, former directors, shareholders

or secured creditors of the company in administration

alternative courses of action considered

any valuations obtained

24/04/2014 18276960.PPT 143

Post Administration

Administrators proposals

Statement of how the administrator proposes to conduct the

administration

as soon as reasonably practicable

but no later than 8 weeks after appointment

The proposals must include details of:

the purpose administrator intends to achieve

how the administration will end

any asset sales or disposals made since the administration

basis of administrator's remuneration

any costs and expenses incurred

24/04/2014 18276960.PPT 144

Post Administration

Initial creditors' meeting

Unless no prospect of return to unsecured creditors, administrators

must hold a meeting of the company's creditors

as soon as reasonably practicable

but no later than 10 weeks after appointment

Creditors representing 10% or more of total unsecured liabilities

can request a creditors meeting

Meeting will approve or reject the administrators proposals

If proposals are rejected administrator must report to court and

seek directions

24/04/2014 18276960.PPT 145

Post Administration

Creditors committee

At least 3 and no more than 5 elected creditors

Purpose of the creditors’ committee:

represent the interests of creditors as a whole

assist the administrator in the discharge of his functions; and

determine the administrator’s remuneration

First meeting within six weeks and regularly thereafter

24/04/2014 18276960.PPT 146

Post Administration

Challenge to administrators actions

Misfeasance

Unfair harm

Not acting as quickly or efficiently as is reasonably practicable

Court can give directions or terminate administrators appointment

24/04/2014 18276960.PPT 147

Insolvency of your Debtors

Summary

There are a steps that can be taken to protect your position

Pre Administration

statutory demand

winding up petition

retention of title

Post Administration

initial creditors meeting

creditors committee

Early action recommended

24/04/2014 18276960.PPT 148

CLOSE AND NETWORKING

LUNCH

DLA Piper

Manchester

1 May 2014

WIN ANNUAL LEGAL UPDATE 2014 · 2019-11-04 · TUPE reform – effective 31 January 2014 Things...

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