CreditFILE
In House News
New Faces- Nicky Beveridge, Commercial Collections Executive
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Nicky joined Brethertons in April from a small sole practitioner practice for whom she had worked for a number of years. Prior to that Nicky worked previously at Read Smith along with Jackie Ray, Paul Lydon and Carmel McGhee.
Nicky deals with all types of insolvency and bankruptcy and with all types of recoveries and enforcement. Nicky has obtained a Part 1 qualification from the AAT. She also has three dogs, two horses and one husband and these keep her extremely busy.
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Nicky has been riding since she was 12 and has a twin sister who also has her own horses and dogs. She lives in Coventry and is a keen supporter of Liverpool Football Club and has lots of LFC items on her desk including pictures of Robbie Fowler! (We have not got the heart to tell Nicky Robbie now plays for Cardiff City!)
It’s the Real Thing- Coca Cola!
Following a competitive tender process Brethertons are delighted to report that we have been selected to undertake debt and asset recovery litigation for Coca Cola Enterpises Ltd .
Jackie Ray head of commercial collections told us “We are delighted to have been appointed to act on Coca Colas behalf. Asset recovery is a field in which the team have a significant amount of experience”.
Debt Still Valid After Bankruptcy
When a person is unable to pursue a claim against someone who has been made bankrupt on account of the bankruptcy having been discharged, it may still be possible to pursue the claim against the bankrupt’s insurers, following a recent ruling.
The case involved 12 claims for breach of trust against nine solicitors and a Mr Dixit Shah. It was brought by the Law Society and 19 of the various clients of the solicitors.
Mr Shah had acquired several solicitors’ firms. Allegations had been made that a total of £12.5 million had been misappropriated by Mr Shah from the client accounts of these firms. Three of the solicitors were subsequently made bankrupt and then discharged.
The Law Society’s compensation fund made various payments to the aggrieved clients, totalling £12.5 million. Since the bankrupts no longer had professional indemnity insurance, cover was effectively provided by the Law Society.
However, because the three bankrupts had been discharged, the Law Society was unable to pursue a claim against them. For this reason, the Law Society attempted to make a claim against their insurers under the Third Parties (Rights Against Insurers) Act 1930, in order to recover monies paid out from the compensation fund in respect of the bankrupt solicitors’ clients.
To do this, it was necessary to prove that the claim against the insured was no longer disputable. Although the effect of the discharge of bankruptcy was to refute the Law Society’s incomplete claims, it was possible to elevate those claims to the status of ‘established’ simply by the admission of the claim in bankruptcy.
It follows that although a right to pursue an action against a debtor was lost once the debtor had been discharged from bankruptcy, this did not mean that the underlying cause of action was destroyed.
The ruling allowed the Law Society the means of demonstrating that the discharged bankrupts were liable to the various clients, by simple proof of debt. Once this had been done, the Law Society would then be able to pursue the insurer directly.
The Brethertons' View:
“This decision has far-reaching implications in such cases The circumstances of this case are very unusual, but for clients of solicitors it provides the reassurance that in the very unusual event of the bankruptcy of a solicitor who is the subject of a claim, the claim can still be pursued. Not all people offering professional advice are insured. Solicitors must have appropriate insurance arrangements in place in order to protect their clients. There are many documented cases of Debt Collection Agencies collecting cash and then going out of business before they account to their customers."
Avoiding Online Theft
Theft using IT is a rapidly growing area of crime, with ever-greater sophistication being used to plunder the bank accounts of the vulnerable and to obtain credit and/or goods. The results can be substantial financial loss (in the short term in any event) and a compromised credit history.
In a recent case, a small business had its bank account cleaned out over the Christmas period after falling foul of a ‘key reading’ scam when using a laptop to access the account from an hotel. These scams occur when a public place or hotel room has a ‘key reader’ secreted nearby (or key strokes are read from a laptop situated nearby if a wireless system is used). The key reader records the key strokes and stores them, often yielding credit card numbers as well as the information needed to access online bank accounts.
Here is a short guide to reducing the chances of theft from your online bank accounts:
1.Make sure you use a secure online bank. The quality of security of Internet banking varies widely. In general, the more interactive (where you respond to prompts, as opposed to just entering information) the access to your account is, the better. Some new accounts offer a card-reader based access which is thought to be highly secure, although a recent report suggests that customers find the use of such devices cumbersome. The key here is to ask yourself how much information a fraudster would need to access your account and how much of that you are inputting. It wouldn’t take too much thought to work out that a surname keyed in by you is probably the correct response to the question ‘what is your mother’s maiden name?’
2.Make sure anyone with access to your IT or IT security information, or to files where such information is kept, is thoroughly vetted. This might well include cleaners, for example.
3.Do not access your account when away if at all possible. If you do need to do so, use a wired, as opposed to a wireless, connection. Never use an Internet café or similar establishment to access your bank account.
4.Make sure you have a good firewall as well as anti-spyware and anti-virus software and make sure you update it and run system scans frequently (daily if possible). Run a scan of your computer system immediately before accessing your bank account.
5.If you do access your account whilst away, make sure you can prove your whereabouts. That way, if you do suffer a loss, you will be able to prove you could not have made the withdrawals.
6.Never use a debit card for an online purchase unless you are 100 per cent sure the site you are visiting is safe.
7.Think about risk and assess it. If in doubt, wait until you are sure you can transact your business safely.
8.The long stop is your bank’s policy towards such losses. If you are defrauded, the bank must reimburse you. However, banks do differ greatly in their attitude and whilst some reimburse promptly and with minimal fuss, some do make the process difficult and require persuasion that the alleged fraud is genuine. Report any suspicious transaction promptly to your bank.
Theft from Internet bank accounts is not usually carried out by amateur hackers, but by organised criminals. The best protection is a good defence.
Directors – Be Careful What You Sign!
The Court of Appeal recently handed down a decision which should convince directors to take great care when they sign contractual documents on behalf of their companies… because if the contract contains a misrepresentation, they can in some circumstances be held personally liable for it by the courts. The fact that the contract may not benefit the director is not a defence.
In the case in point, a company entered into a contract to pay for goods it then received. A director of the company signed the contract knowing that the company was insolvent and would be unable to pay for the goods.
The Court of Appeal ruled that the director had made an implied misrepresentation to the supplier. Since he knew the goods would not be paid for, the Court found him personally liable for the sum owed, on account of his deceit.
The message for directors is to be careful what you sign. ‘Limited liability’ may not be limited if the court decides that the director knew that the company could not meet its obligations. This could apply in a variety of instances, for example where the company enters into a long-term agreement such as a lease of new premises.
The Brethertons' View:
“The Companies Act 2006 places a statutory burden on directors to adhere to certain standards and consider specifically the effects of their decisions in various ways. A part-time, non-executive or even ‘shadow’ director (one who has no official position in the company but whose decisions are normally followed) can be in the firing line when things go wrong just as surely as can the full-time working directors.”
Disqualification Traps for Directors
The Companies Act 2006, most of which is now in force, imposes tough new criteria governing the behaviour of directors. In particular, when making decisions directors must bear in mind the potential effects of those decisions on various ‘stakeholders’ (those with an interest in their outcome, such as employees and shareholders) and the environment.
In several circumstances, miscreant directors can be disqualified by the Secretary of State from acting as directors. These include:
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where the director has been convicted of an offence in connection with a company
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where the company becomes insolvent and where the conduct of the director is such that it renders them unfit to be a company director
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where there is fraudulent trading or fraud or breach of duty in relation to which the company is wound up;
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where the company persistently defaults in filing documents with the Registrar of Companies; or
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where in the view of the Secretary of State it is in the public interest for the director to be disqualified.
It is important to note that disqualification may not necessarily be the result of a criminal offence or because the company with which the director was involved has failed.
Just because a person does not carry the title ‘director’ or is a non-executive director does not mean they are not subject to these rules. They apply to anyone who acts in a directorial capacity (whether their title is director or not) or who is on the board of directors of a company.
Disqualification orders can be made for a minimum of two and a maximum of 15 years. Recently, a director was disqualified for refusing to cooperate with an investigation into another company with which he had dealings but of which he was not a director.
In Brief
IVAs – New Code of Conduct
A new voluntary code of conduct for the management of Individual Voluntary Arrangements (IVAs) has been announced. In an IVA a debtor agrees to make payments to his or her creditors over a period of years (typically three to five). The new code of conduct will ensure that the processes leading to an IVA will be more transparent and will give greater certainty as regards the debtor’s home as well as greater reassurance for creditors and the debtor that the IVA applied is the best option.
The new code of conduct will incorporate the use of standard terms and conditions. The use of a standard framework is intended to allow the debtor and creditors to be more open in their dealings with one another.
The new code of conduct can be found on the Insolvency Service website at www.insolvency.gov.uk.
Mediation – Delay May Have Costs Implications
There have been a number of cases in which a refusal to mediate on the part of one party in a dispute has led to that party carrying the costs (at least in part) of the other party, even though the party which refused to mediate won the case. Recently, however, a case has suggested that there may also be adverse costs implications in the event that one of the parties unreasonably delays consenting to the commencement of mediation ‘until very late, when its chances of success are very poor’.
This is another example of the impatience shown by the courts to intransigent litigants.
Modernising the Courts Means More Wigs!
The Government always seems to be introducing some sort of ‘modernising’ initiative or other and in recent years the legal profession has had to deal with a great number of changes aimed at modernising the law.
One very curious form of ‘modernisation’ was introduced recently when solicitor advocates were given the right (previously reserved for barristers) to wear wigs in court when members of the Bar would ordinarily be allowed to wear them. This ruling will mean that solicitor advocates will be able to ‘wig up’ when appropriate in the Magistrates’, Crown and County Courts.
The ruling is aimed at removing what was described as ‘an unjustified advantage’ for the Bar.
The Brethertons' View:
“The Government has got too much time on its hands”!
2008 FREE Credit Control Webinar Programme
All webinars (seminars over the web)commence at 12.30pm, a convenient time to get your team together for an hours training over the lunch hour.
You need no special equipment other than a telephone with a hands free facility and a computer with an internet connection. You will hear the speakers through your telephone and see interactive slides/graphics on your PC as the speaker makes the presentation. Copies of the speakers handouts/slides will be emailed in advance of the presentation. Please visit our events page at www.brethertons.co.uk and complete the booking form below to reserve your link.
12.30pm - 11th September: Terms And Conditions In A Nutshell
Why you should have them and how you should use them.
All business should have Terms and Conditions of Trading, as failure to do so could mean that it is left to the Court to decide on what terms businesses have entered into contracts. Who in there right mind will want a Judge deciding the terms on which you should do business? This Webinar will include:-
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Why have them?
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The principal clauses to use
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The clauses to avoid
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How to use T&C’s to your advantage
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How to win the battle of the forms
Click here to download the booking form for the Terms and Conditions webinar.
12.30pm - 13th November: Small Claims Court Procedures In A Nutshell
How to maximise your chances of successfully recovering your cash if you have to go to a court hearing.
If your debts remain unpaid you may find yourself attending a hearing before a District Judge in the Small Claims Court. This Webinar will cover the following subjects:-
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How to avoid bad debts in the first place
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Smalls County Court proceedings
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Preparation of cases
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Conducts at hearings
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Enforcement proceedings and recovering expenses
Click here to download the booking form for the Small Claims Court Procedures In A Nutshell
12.30pm – 4th December: Effective Letter Writing
How to write letters which will grab a debtors attention.
If your debts remain unpaid you may find yourself attending a hearing before a District Judge in the Small Claims Court. This Webinar will cover the following subjects:
Click here to download the booking form for the Effective Letter Writing Webinar
