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Do company directors owe a ‘creditor duty’ when a company is nearing insolvency?

Factual background The facts of the matter were as follows: in May 2009, the directors of AWA Ltd (‘AWA’) made a dividend distribution to its parent company, Sequana. The dividend was lawful and was distributed at a time when AWA …

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ESG credentials key to attracting private investments, with ethical and moral concerns a deciding factor

Read the full report here. Investment decisions based on ESG credentials are driven by investors’ moral and ethical views rather than financial reasons When asked why ESG credentials can make an investment a more attractive proposition , over a third …

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Dispute resolution services

An overview of our  range of commercial litigation services, supporting businesses operating in a vast range of industries in the resolution of a full range of commercial disputes.

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Power women and maternity

Maternity and motherhood often still stand between women and achievement. According to a survey by the European Human Rights Commission, 44% of employers believe women should work for an organisation for at least a year before deciding to have children, and a third of employers believe new mothers are ‘less interested in career progression’. But when we step back and look around us, we see that this is just not true.A shining example of a woman successfully managing motherhood and a career is New Zealand Prime Minister Jacinda Ardern. The PM took six weeks’ maternity leave whilst in office in 2018 – New Zealand, of course, did not fall apart. Whilst on maternity leave, the PM even continued to read cabinet papers and consult on significant issues. The PM pointed out upon her return ‘I am not the first woman to multi-task. I am not the first woman to work and have a baby – there are many women who have done this before’. Far from being less ambitious, the PM was sworn in for a second term in November 2020 after a landslide victory.Ms Ardern was the second world leader to give birth in office. The first was Benazir Bhutto – the former and late Prime Minister of Pakistan. Ms Bhutto had to take a different approach, and when she had her daughter in 1990 she had kept her pregnancy secret even from her colleagues and returned to work the day after giving birth (something no woman should have to do). One of her cabinet ministers said: ‘suddenly we learn that she has not only gone and delivered democracy, she’s also delivered a baby’. The PM said ‘it was a defining moment, especially for young women, proving that a woman could work and have a baby in the highest and most challenging leadership positions’. I think it certainly was.It should be of no controversy then that the UK government is going to update the law so that the Attorney General can take six months’ maternity leave. The only thing which has surprised me about this announcement is that there was no provision in place for this before. It would be naïve to think that any government office is the sum of one person, so if we cannot afford for an individual to take time off to have a baby then that is a failing of a system. I hope that this high-profile change will show all UK employers that mothers can be, and want to be, in positions of power. There is still much work to be done to reverse stereotyping mothers in this country so we do not fall behind the rest of the world, but this is a start.

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Firms told to look out for domestic abuse signs

The pandemic is making employers and employees re-assess the value of the workplace. One factor, as Business Minister Paul Scully MP has pointed out, is rarely considered: are employees being subjected to domestic abuse?All employers have a duty of health and safety towards their employees which includes when employees are working from home. Employers need to really think about this and not assume everyone has the same home life. For example: an employee is desperate to go back to the office when they seem ok working from home – why is this? An employee is particularly distressed at the idea of being furloughed – could this be because they are scared of being at home? It is not implausible that an employee may be safer going to the office and risking contracting Covid-19 than staying at home with their abuser. Employers must be alive to this fact.It is good to see that the government is actively considering the impact of domestic abuse on employees and giving employers tips on how to recognise the signs, but the awareness campaign needs to go further. It is for all of us to spread the word that this is a real, sometimes life-threatening, issue which happens every day.Many victims of abuse are employed, meaning that they will likely have a boss they speak to every day. If that boss were trained to pick up the signs that something is wrong then a dialogue of how to combat the issue can start, and that is the first step to a way out for the victim. Everything starts with colleagues paying attention to each other more and talking about abuse openly. Employers have the power to start that dialogue today.Read Mr Scully’s full letter for advice on how employers can combat domestic abuse here. This includes free tips which employers can do almost immediately, and I would strongly recommend that employers read it.

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Working from home will not be the new normal post-Covid, says Rishi Sunak

The Chancellor makes some good points in this article, but he does seem to paint an idealistic picture of working in the City which does not necessarily reflect reality.The Chancellor is right that we are social beings, and we all miss even the minor interactions we used to have with colleagues in the office, but does that really mean we will be going back to the office full time and resuming our working lives as they once were? The Chancellor has pointed out that 75% of investment banks would let their staff work from home at least some of the time – I find that figure surprising (although I do not think this is representative of most sectors as investment banking is somewhat unique in its working style). I too am missing the buzz of central London, that ‘spark’ of creativity the office brings, and after work dinners and drinks with friends. But are we all really ready to give up the liberties working from home provides?It is a question for employers, too. The prospect of paying (often astronomical) overheads for prime London real estate only to have some of the workforce actually use that space is by no means a tempting one and is perhaps enough for some to close their premises altogether. Some employers may even find that their staff are even more productive when they are at home because a better work/life balance should go some way to preventing the ‘burn out’ which some London employers have historically struggled to prevent.I do not think that most London office workers will ever fully return to the office. Instead, I think we will see a new ‘hybrid’ way of working emerge which can take the best of our traditional working habits and of working from home. What that will actually look like, we simply do not know.

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Battle of the b(r)ands: Lady A vs Lady A

The BBC has reported that the Seattle-based blues musician, Anita ‘Lady A’ White, has filed legal proceedings against the band Lady A, formerly known as Lady Antebellum. Although the article’s headline misleadingly claims that the issue is one of copyright infringement, it actually relates to a trade mark dispute, adding to the music industry’s long history of battles of the brands.Lady Antebellum changed its name to Lady A in the aftermath of the Black Lives Matter protests, its former name carrying associations with the pre-Civil War US South. When the band was contacted by the Seattle-based Lady A, the parties entered into negotiations that quickly broke down. The band then filed an action seeking a judgment that its name was not infringing. White has now filed a counterclaim stating that her long-term use of the ‘Lady A’ name means that she is entitled to continue to use it, and that the band’s adoption of the same moniker has diluted her brand’s value and caused lost sales due to confusion.Lady Antellebum’s decision to rechristen itself is not surprising in an age where civil rights movements are resonating more widely and profoundly than ever. It follows other industries’ consideration of several long-established brands. In June, for instance, Mars announced that it planned to overhaul its ‘Uncle Ben’s’ brand, which dates to 1946 and was named after an African American Texan rice farmer.However, the band’s apparent failure to come to an arrangement with Anita White highlights the importance of conducting clearance searches as far as possible before taking a step as critical as a brand change. Pre-filing searches, when conducted properly, can flag potential issues that otherwise might have been overlooked, saving headaches in the long run. The pre-emptive suit against Anita White has also resulted in unfavourable publicity for the band, and, if the case proceeds to trial, it may have to incur substantial legal fees.A more pragmatic solution for any musician facing a similar dilemma is to approach another artist using the same or similar name and ask whether they are open either to changing their brand or co-existing with yours. If neither option works out, there are plenty of examples of bands that have consequently chosen alternative names due to the unavailability of their initial preference, from Snow Patrol (‘Polar Bears’ had already been taken) to Blink 182 (the number was added after the band received a challenge from a homonymous Irish band). Once you have decided on a name that is available, it is wise to protect it as soon as possible as a trade mark. This will enhance your rights in respect of your brand, but also act as a deterrent to any other competing artists who might be interested in using the same or a very similar name.

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Interim injunction against Bitcoin discharged and damages considered an adequate remedy

In a recent High Court decision, Toma v Murray, Robin Vos sitting as Deputy High Court Judge, declined to a continue a without-notice interim injunction which restrained the Defendant from dealing with Bitcoin held in a coin deposit account.  Vos held that damages would be an adequate remedy in this instance.The Claimants sold Bitcoin through an account on the Finnish platform However, the payment they received was reversed, leaving the Claimants without the Bitcoin or their payment. The Defendant controlled the accounts used to make and withdraw the payments, and which continued to hold the Bitcoin. The Defendant did not go as far as to admit that there was a fraud, though he allowed the Court to proceed on the basis that a fraud had taken place, and asserted that the account had been hacked.The Claimants initially obtained a without notice interim injunction. LocalBitcoins also froze the account, though they said that in absence of a court order they would release the Bitcoins to the Defendant.On reviewing the injunction and deciding whether it should be upheld, Vos decided that although the Claimants’  made a proprietary tracing claim, they were ultimately seeking the value of the Bitcoin held in the deposit account and therefore the claim could be satisfied in monetary terms.He held that the injunction should not be upheld and the case is set to continue to determine whether or not there was any fraud on the part of the Defendant, a matter which could not be dealt with at an interim hearing.    This is an interesting decision as it considers Bitcoin in relation to its value in monetary terms over its proprietary value. The Court distinguished it from AA v Persons Unknown [2019], the precedent for Bitcoin interim claims, as the Defendant was identified and had shown he held a significant unencumbered asset and there was no reason to believe he would not be able to meet any award against him. This was balanced against the fact that the Claimants admitted that they would have difficult in satisfying across undertaking of damages. On balance the Court considered that this decision left the Claimants with a remedy and did not place an disproportionate risk of loss on the Defendant.Some consideration was given to the volatility of the price of Bitcoin and the impact this may have on both parties. Though the Court focused on the fact that a price and value was given to the Bitcoin at the time of sale and the claim therefore was considered to be for the price paid. A condition was included in the Order to allow the Defendant to sell the Bitcoin only with the consent of the Claimant as a means of neutralising this risk. It shows once again that the court’s are having to approach digital asset cases innovatively. It will be interesting to see if any concession is given to the change in value of Bitcoin in the time before final judgment.Toma and another v Murray [2020] EWHC 2295 (Ch) (29 July 2020) (Robin Vos, sitting as Deputy High Court Judge).

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Is it a Fair CoP?

Confirmation of Payee (CoP) checks were introduced on 30 June 2020. The system is a new way for banks to check the account details of a payee (that is the recipient – whether a person or a business – of a bank transfer) before the payment is sent. This helps to avoid a payment being sent to the wrong account, whether as a result of a mistake or a fraud.The CoP mechanism was originally due to be introduced in late March 2020, but it was postponed due to COVID-19. The six principal banking groups in the UK were all required to implement the new protection by this date, though some smaller banks and building societies may also choose to introduce it.Previously when processing a payment mandate, only the payee account number and sort code were checked. This left an opening for fraudsters to substitute their own bank account details for those of the intended recipient of the funds as nobody would check whether the payee’s name matched the name on the account to which the funds were to be transferred. However, from 30 June 2020, when a customer sets up a new payee or changes the payee details on an existing payment mandate, a CoP check will be run to confirm whether the payee’s name is in fact the same as that of the accountholder.There are three possible responses from a CoP check. First, the payee bank may confirm an exact match between the payee name and the name of the accountholder in which case the payment will be processed as planned. Alternatively, there may be a partial match. The customer making the payment will then be shown the name of the accountholder in order to verify whether this is in fact the correct payee. Lastly, there may be no match, in which case the customer is asked to check the payee name and account details before proceeding with the payment.The new system is intended to reduce the risk of authorised push payment (APP) fraud, as well as innocent mistakes made by customers. APP fraud happens when fraudsters deceive individuals (either consumers or employees of a business) into making a payment to the fraudster’s bank account. An example of this would be sending an invoice that looks very similar to one which the individual is expecting, such as an invoice from a supplier, but which includes the fraudster’s own account details. The individual arranges payment of the invoice but has unknowingly paid the fraudster instead of the legitimate recipient.While it is expected that the CoP checks will reduce instances of fraud, there are limitations to the new system. CoP checks can only be carried out where both the paying and payee banks have implemented the mechanism and, at least for the time being, only where the payments are being made by the Faster Payments System or by CHAPS. CoP checks also cannot be carried out for international payments. Fraudsters are likely, therefore, to adapt their approach, for example, by opening accounts with banks which do not have the CoP mechanism in place.The existence of the partial match response may also lead to fraudsters opening accounts using names which are very similar to the names given on the fake invoices in the hope that the bank customer won’t notice the slight discrepancies or that they will assume it’s a mistake on the invoice. Bank customers should be check partial match responses very carefully to avoid this risk, and if necessary, contact the payee to confirm the account details. Where contacting the payee, make sure to use a different contact method than the one used to send the invoice, for example, by calling a supplier instead of replying to the email attaching the invoice.Businesses should also take appropriate steps to limit the risk of customers not getting an exact match on a CoP check when paying an invoice, for example, by ensuring that the payee name listed on their invoices is an exact match for the name on the bank account.

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The BoE encourages market participants to move from LIBOR to risk-free rates with new policies for the treatment of LIBOR-linked collateral

The Bank of England (BoE) provides liquidity to market participants and lends to firms against a wide set of eligible collateral. To encourage market participants to move away from LIBOR, the BoE has announced new policies for the treatment of LIBOR-linked collateral in the BoE’s Sterling Monetary Framework lending operations. Specifically:From 1 April 2021, the BoE will apply increasing haircuts on all LIBOR-linked collateral maturing after 31 December 2021. This means that the value of the LIBOR-linked collateral against which the BoE is lending will be reduced by an increasing percentage until the end of 2021. Haircuts are scheduled to reach 100% by 31 December 2021.From 1 April 2021, any LIBOR-linked collateral issued on or after that date and maturing after 31 December 2021 will be ineligible for use in the Sterling Monetary Framework.These milestones for LIBOR-linked collateral have recently been revised to account for the temporary disruption caused by the Covid-19 pandemic and resulting changes to the interim milestones announced by the Working Group on Sterling Risk Free Rate Transition (the Working Group) on 29 April 2020. In particular, the Working Group has announced that all new issuance of sterling LIBOR-referencing loan products that expire after the end of 2021 should cease by the end of Q1 2021 (previously end of Q3 2020).Although the impact of the Covid-19 pandemic has delayed certain milestones, the date from which the BoE intends to apply a 100% haircut on LIBOR-linked collateral (i.e. implying effective ineligibility) remains 31 December 2021. This shows that the central assumption remains that firms cannot rely on LIBOR being published after the end of 2021.

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