Legal Update - September 2008
Welcome to our September newsletter.
The last few months have been dominated of course by the ever growing credit crunch. Bankruptcies and insolvencies are on the up as are redundancies and unemployment sadly. Even negative equity-a phrase not heard of for the last decade has reared its ugly head again. Business confidence has dropped and activity has slackened.
Nevertheless in these uncertain times there are a number of key legal tactics that can be adopted that can help you weather the financial storm.
In no particular order you should consider:
- Tackling locked up work in progress.
- Reviewing your own credit terms to trade customers.
- Negotiating with lenders on overdrafts and loans.
- Seeking other inward investment by way share issue.
- Watching your cash flow.
- Cashing in on your great ideas.
- It’s a buyer’s market so haggle over office leases/licenses.
- If you do have to make redundancies…
- Flexible working.
- Consider merging or cooperating.
- Watching your overheads-particularly energy costs.
For more details of this please get in touch to receive our free “Surviving The Credit Crunch” legal bulletin.
In this issue you can read about:
- The dangers of Web2.0 social networking.
- Star Wars-fight over IP rights.
- IR35-new concerns.
- Single shareholder companies-what do director-employees get paid when the company goes bust?
- Non exec directors-duties and liabilities.
- Agency is a matter of fact.
- Age discrimination applies to the young.
We have seen of late how social networking sites like Beebo, Linked In and many others are concerned re adverse publicity over the problems inter alia of grooming, online suicides, identity theft, illegal downloads/file sharing and the latest issue to become hot news has been the first reported case whereby Facebook has been sued for defamation following adverse comments. This comes as no surprise to us as we have supported several clients over the last couple of years concerning cases about unfair commentary by anonymous suspected competitors on supplier ranking websites and on blogs with defamatory statements. We have also advised on take down policies, online monitoring and suspension of members as well as disclaimers and the like so know well what can be done by the hosts to tackle this problem. Broadly online publishing is no different than paper and the defamer online can be uncloaked by legal means and sued directly as can the host in certain circumstances.
Sticking with the ethereal a high profile Intellectual Property case broke news earlier in September when George Lucas’s company sued a storm trooper replica production company. Having seen a whole platoon of the same marching around Wells moat and castle one summer sunny afternoon for some bizarre reason I can testify business had been good for the English company though this judgement somewhat curtails business growth for the future as the English court was prepared to uphold US copyright which was felt to have been infringed (though the opposite had been decided re UK copyright). For UK businesses this decision will be a worrying one as it suggests foreign law and decisions outside the EU can now be considered, adding considerably to the complexity and cost.
Also of concern to SME’s will be this IR35 decision though each case is decided on its own facts clearly. Here the benefits of being a sole director shareholder gaining dividends was challenged by HMRC which was ultimately vindicated. If you believe your situation may be under threat as a result then please get in touch as by rethinking your business practises, operations and structure with minimal costs you could save yourself from an expensive tax headache in the near future.
In a similar vane is this decision which looks at the preferential treatment of employees of an insolvent company. The key issue to be answered is whether a director-employee can enjoy the same preferential treatment as an ordinary employee as if it were the directors who had caused the insolvency (in some situations) might benefit from a title they could obviously manipulate to their own advantage. In these testing times the law will want to protect the genuine employee from the “wolf in sheep’s clothing” though at present final judgement is awaited.
Likewise being a non-executive director by some is thought as being different from a “fully blown” executive director by this Scots case shows the fallacy of this assumption.
Positively a German case this month clarified the position of commercial agents and highlighted the distinction with resellers who are not protected. If you do not know the difference or need an explanation or a contract drafted for one or the other they do contact me at bmc@business-lawyers.org.
Lastly do be aware that age discrimination claims are costing the unaware dear as this case proves. Here a claim for £15,000 plus was made by an administrator during a three month probationary period and the claim was increased by flagrant breaches of the statutory procedures. For advice on how your business can avoid such claims we shall be happy to assist.
Wishing you and your business future success in these challenging economic times ahead.
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