May Mania and Copyright in Computer Programs: Round 1 to Google, Oracle Regroups and Software Developments in the ECJ
August 24th, 2012
This article was first published by E-Commerce Law & Policy on 1August 2012, and is reproduced by kind permission.
May 2012 was an important month for copyright judgments in relation to software development and what aspects of a computer program can be protected by copyright, both in the UK and the US. Philip James, Partner at Pitmans SK SPort & Entertainment LLP, assesses both the UK and US decisions and compares the issues under contention in each case.
The UK Perspective
On 2 May the European Court of Justice (ECJ) decided in case C-406/10 that the functionality of a computer program and the programming language cannot be protected by copyright. In SAS Institute Inc. (SAS) v World Programming Limited (WPL), the High Court referred questions to the ECJ regarding the scope of the legal protection conferred by EU law on computer programs and whether the protection extended to programming language.
SAS is the developer of the SAS System, the statistical analysis software, and the SAS Language introduced to enable users to write their own application programmes (scripts) to personalise the SAS System. SAS claimed that WPL had infringed SAS’ copyright by copying and reproducing the functionality of the SAS System to create an alternative software, the ‘World Programming System’, capable of executing application programmes written in the SAS Language (WPS Programmes). In so doing, WPL acquired copies of the Learning Edition of the SAS System supplied under a licence which restricted usage to non-production purposes. WPL then studied the functionality of the SAS System to develop the WPS Programmes; WPL did not have access to the source code of the SAS System components or copied any of the text or the structural design of that source code.
The ECJ ruled that formatting of data files used in computer program to exploit its functions, functionality of a computer program and the programming language does not constitute a form of expression and as such fell outside of the protection conferred by the Council Directive 91/250/EEC in relation to the legal protection of computer programs. They went on to say that any contractual provision restricting the right of a purchaser of a software licence to observe, study and test the software to determine the idea and principals which underlie any element of the program is null and void.
The ECJ concluded that, ‘to accept that the functionality of a computer program can be protected by copyright would amount to making it possible to monopolise ideas, to the detriment of technological progress and industrial development’. A word of warning: it is important to note that the fact that a developer does not have access to the underlying source code does not mean that someone who replicates a program’s functionality may not infringe an original developer or licensor’s rights in the prior program. The case will be decided on its facts and, where a developer has had access to a sufficiently detailed specification, manuals or designs from which the relevant program was borne (i.e. not just high level designs but plans which are only ‘one-step removed’ from the software itself, following the decision in Bezpečnostní softwarová asociace case (No. C-393/09) ), this form of reproduction may still constitute copyright infringement. In addition, the case followed the principle established in Infopaq International A/C v Danske Dagblades Forening (No. C-5/08), namely that:
(a) where something is the author’s own intellectual creation, it is protectable as a copyright work; and
(b) part of a work will be protected by copyright if it contains elements which are the author’s own intellectual creation.
For this reason, software developers need to be vigilant and carefully manage the processes and environment in which programs are developed where such programs are intended to replicate prior existing software. Consequently, the case has returned to the High Court in London and the dispute between the parties will be decided in the UK accordingly.
The US Perspective:
The ECJ decision was reported when the trial on resembling issues between two American giants Oracle America Inc. (Oracle) v Google Inc. (Google) was underway in San Francisco (a battle which is akin to two sparring America’s Cup boats). On the very last day of May 2012, a judge in the District Court in the Northern District of California delivered a decision following a six weeks trial of the first of the co-called ‘smartphone war’ cases per judge’s own description.
In 2010 Oracle acquired Sun Microsystems, Inc., the developer of Java programming language and Java platform. Oracle subsequently accused Google of infringing Oracle’s copyright in Java by replicating 37 application programming interfaces (APIs) in Google’s Java-programmed Android platform. Oracle did not allege that Google had copied the 37 API packages (apart from the eight files of code which Google admitted to have copied, but which was not part of Android). Instead, that Google had developed its own version for Android.
The main question at issue was the extent to which elements of the structure, sequence and organization of the Java API replicated in Google’s Android platform were protected as a copyright work and, in particular, whether the elements of a platform (Java in this case), which had been copied (albeit in the absence of copying the underlying Java code) constituted works which infringed Oracle’s copyright or, unless patented, were free for others to use.
As the trial in California unravelled, the analysts, software start-up investors and independent programmers observed it in a state of panic, posting warnings in blogs and other media that a judgment in Oracle’s favour would result in an irresolvable conflict between European and US concepts of copyright protection.
A decision in Oracle v Google was delivered much ahead of schedule (the trial was expected to last till the end of June). The case has highlighted the stark contrast between copyright and patent protection in software development. Oracle has since indicated it will appeal.
The Judge Hon William Alsup wrote an astonishingly clear and technically flawless decision, having revealed at trial that he does a fair bit of programming himself. In reviewing Oracle’s copyright infringement claim, the learned Judge ruled that the following principles should be applied:
- where there is only one (or a limited few) ways to express something, then no one can claim ownership of such expression by copyright – this is called the ‘Merger Doctrine’;
- names and short phrases (like class names used in Java and replicated by Google in Android) are not copyrightable – the ‘Names Doctrine’;
- copyright protection does not extend to any idea, procedure, process, system or method of operation or concept regardless of its form;
- functional elements essential for interoperability are not copyrightable;
- copyright protection should not be offered merely to reward an investment made in a body of intellectual property.
The judge readily recognised that the design of methods of Java’s API was a creative endeavour but concluded that such inventions at the concept and functionality level should only be protectable by patent. Significantly, the method specifications were not infringed because the rules of the Java programming language required these to be identical for the Android API to ‘talk’ to Java.
The resulting order holds that under US copyright law no matter how creative or imaginative a Java method specification may be the entire world is entitled to use the same method specification (inputs, outputs, parameters) so long as the line-by-line implementations are different. Similarly, the Judge rejected Oracle’s argument that the arrangement of methods in classes in Java is a taxonomy and its repetition infringes copyright; instead the court found that the arrangement of methods of operation, despite being original and creative, merely resembles a taxonomy but is not such and can only be protected under a patent, but not in copyright. ‘To accept Oracle’s claim would be to allow anyone to copyright one version of code to carry out all or part of the same commands. No holding has ever endorsed such a sweeping proposition’.
It should be noted that the court held that this decision was very fact-specific and should not read to mean ‘that Java API packages were free for all to use without licence, neither that that structure, sequence and organisation of all computer programmed may be stolen’.
The decision of the ECJ and the Northern District Court of California suggests that software developers may wish to consider whether or not to patent the elements of their method specifications, structure, sequence and organisation of the software products. In so doing, however, it will be necessary to weigh up the advantages and disadvantages of seeking such patent protection e.g. the cost, as well as the requirement to disclose such methods may, in itself, justify a decision not to proceed with a patent application strategy and corresponding patent protection.
Both decisions underline the need for developers to undertake a detailed risk assessment before investing in developing software products that run a significant risk of replicating similar technology and elements of software programs. In the absence of making such an assessment, developers (and licensees in turn) may be running the risk of gambling whether their resulting products may be found to infringe copyright in prior programs, despite there being no copyright in a functionality of a computer program. Managing the development process and deploying techniques during production may also help to minimise such risks.
August 21st, 2012
When employers take on new employees from abroad they should take care to ensure that the employee not only has the right to work in the UK but that any restrictions on that right are adhered to during the course of their employment. They need to put systems in place to ensure that compliance is monitored, and any breaches flagged up, and dealt with. If they do not, they can be fined, and have their status for dealing with immigration matters downgraded from A to B.
It has been reported by the Daily Telegraph that in July 2012 the Authorities found students, of over 10 nationalities were working significantly longer hours than their visas allowed at the warehouse operated by Tesco in the Tesco.com building in Croydon, south London. Tesco employs 300,000 people in the UK. It has an A status rating for Tier 2 migrants. Tier 2 migrants are highly skilled workers or intra group transfers so that licence is important to a company like Tesco.
UK Border Agency officials arrested 20 of the students for alleged breaches of visa terms that restricted the amount of hours they could work. It is understood that at least seven of the students, none of whom has been identified, have been deported. It follows Home Office operations to put a stop to “visa abuse”.
Officials discovered the students, who were predominantly of Bangladeshi and Indian origin, had been working up to three-and-a-half times longer than their visas allowed. The workers, believed to be university students aged over 18, all had the right to work in the UK.
Tesco was subsequently issued with a “notification of potential liability”. Authorities are now deciding whether to go further and issue the employer with a notification of liability, and a fine of up to £10,000 per illegal worker.
The Home Office said the company needed to provide “evidence that it was carrying out the legally required checks to avoid a fine”.
UKBA Officials approached Tesco executives shortly before the raids and asked them to keep giving the students illegal overtime “in order to catch them in the act”.
Investigations found they had been working between 50 and 70 hours a week during the school term, when their visas only allowed for 20 hours.
The retailer said it was “co-operating fully” with the UKBA, adding that it had tightened its procedures. It did not condone employing illegal workers.
In a statement, a Tesco spokesman said: “In cooperation with Tesco, the UK Border Agency visited our dot com store in Croydon in July.
“As a result of this visit, a small number of staff was found to have breached the terms of their working visas. We continue to cooperate fully with the UK Border Agency as they look into this issue.”
“We take our responsibilities as an employer very seriously and do not condone illegal working of any kind.”
He added: “We have a comprehensive system for ensuring all the correct procedures are followed in this area which has been externally audited and generally works well.
“We have now taken additional steps to ensure an incident of this nature does not happen again.”
A UKBA spokesman said: “We received information that some staff members were working in the UK illegally at Tesco.com on Factory Lane, Croydon.
“The operation was part of an ongoing campaign to tackle visa abuse which has seen over 2,000 offenders removed since the beginning of May.”
He added: “The employer now needs to provide evidence that it was carrying out the legally required checks to avoid a fine.”
Both the UKBA and Tesco declined to comment further or discuss what fines could be issued saying that investigations were “ongoing”.
The other risk for sponsors of students (Tier 4 migrants), which will be the educational institution, is that their sponsorship licence may be downgraded from A to B or it may be revoked in an extreme case.
The Sponsorship system works on trust. Tesco has Tier 2 (Highly Skilled) Sponsorship status which is graded A for both general and intra group transfers. If Tesco employed these students and allowed them to breach the limitations on their hours of work and/or it transpires on investigation of Tesco’s systems that they were never in place or defective the licence could be downgraded to B or be revoked.
If Tesco was downgraded to B it would be given an action plan to improve over periods, usually of 3 months. B-rated sponsors will also be subject to more frequent and thorough visits by the UKBA to ensure compliance, and may have to meet additional duties in comparison to an A-rated sponsor. In addition if they become a B graded sponsor and have a Tier 2 migrant he would have to show £800 in funds for himself and £533 for each dependant they wish to bring to the UK. An undertaking from Tesco in that regard would not be acceptable as they would no longer be an A rated sponsor. An “A” rated sponsor can simply provide an undertaking in respect of maintenance for the migrant and their dependants.
August 20th, 2012
Pitmans flew the flag for Team GB’s sailors on an enjoyable day trip to the Olympic sailing venue in Weymouth on 9th August 2012.
Exquisite British coastline and the prospect of medal races made this a much anticipated event, but conditions were not exactly perfect. Despite brilliant sunshine, a completely windless day ensued, meaning that the men’s and women’s 470 finals were rescheduled.
However, Pitmans’ Partner Philip James remained upbeat, saying “It was a glorious day, and despite the lack of racing, we were immensely proud to show our support for Team GB.”
August 20th, 2012
The Government has recently submitted an amendment to the Enterprise and Regulatory Reform Bill, detailing its proposals for “protected conversations”.
Under these proposals employers will be able to hold protected conversations with employees with a view to terminating their employment under a settlement agreement. This conversation will not be able to be used as evidence if the employee then decided to take the employer to the Employment Tribunal for unfair dismissal.
Protected Conversations may be particularly useful for employers in discussing difficult issues like productivity and retirement without threat of legal action for unfair dismissal from the employee.
Under the Government’s proposals, an Employment Tribunal would not be able to take into account “any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee”. However this would not extend to claims for discrimination, automatic unfair dismissal (such as whistleblowing) or breach of contract.
However, if something “improper” arises in the discussion, the proposals would allow the Tribunal to take the discussion into account. The definition of what is deemed “improper” is bound to be the basis of much discussion at Tribunal. However until these parameters are drawn, Tribunals will have to hear the protected conversations in order to determine whether they have involved the something that has been done or said by the employer is “improper”.
The reality is that in practice, at least initially, the concept of protected conversations may prove problematic. The benefits of protected conversations in its current form are uncertain and various issues require clarification. They include situations where employees raise discrimination issues during a protected conversation or where an employee’s grievance which leads to a protected conversation, ends with the employee resigning and claiming constructive dismissal. In the latter of these situations a Tribunal would need to determine whether initiating such a discussion would constitute a fundamental breach by the employer of the implied term of trust and confidence.
Many commentators have stated that these proposals create more problems than they solve and that the high levels of uncertainty that accompany these proposals will not prove popular with employers. Some have even commented that because the Government will desperately want to avoid a flood of litigation which will inevitably follow the implementation of the Bill in its current form, additional amendments to the Bill should be expected soon to clarify many of these points.
For further information on this article or any of the issues involved, please contact Pitmans’ Employment team.
Partner, Head of Employment
T: 0118 957 0340
August 17th, 2012
1. Fiduciary duties
The Court of Appeal held in the case of Ranson v Customer Systems Plc that even senior employees do not owe their employer a fiduciary duty unless such a duty arises out of the terms of the contract of employment.
What does this mean?
Employees merely owe a duty of fidelity, that is to do their job faithfully and in accordance with the implied term of trust and confidence. They are not required to put the interests of their employer before their own. They are, therefore, entitled to make preliminary plans for a competing business while they are still employed, including having conversations with potential clients for the new business.
What should employers do?
Employers who are concerned about the risk of employees planning to set up competing businesses should take specific legal advice about the protection they may be able to write into employment contracts going forward.
In Packman v Fauchon, the Employment Appeal Tribunal has held that a reduction in headcount is not necessarily required for redundancy.
What does this mean?
If the amount of work available for the same number of employees is reduced, then a dismissal of an employee caused wholly or mainly for that reason is a redundancy.
What should employers do?
Employers who wish to reduce the number of hours worked by their staff should seek their agreement to a reduction in hours. Where agreement is not forthcoming and it is necessary to dismiss an employee, the employer should take specific legal advice but should budget for making a redundancy payment, if the employee is eligible to receive one.
3. Reasonable adjustments
In the recent case of Olenloa v North West London Hospitals NHS Trust, The Employment Appeal Tribunal has held that an obligation to make reasonable adjustments does not necessarily end when an employee goes on sick leave.
What does this mean?
If adjustments would enable an employee, who is off sick, to return to work, the employer is under a duty to make such adjustments as are reasonable.
What should employers do?
Employers should keep the cases of employees who are off sick under review, particularly where a disability is involved.
4. Competing businesses
The Employment Appeal Tribunal has held in Khan v Landsker Child Care Limited that it is not in itself gross misconduct for an employee to make preparations for a future competing business. Nor is every piece of an employer’s information which he regards as important or confidential, and which the employee is aware of, necessarily confidential information as a matter of law.
What does this mean?
Employees who take steps towards setting up after they leave in competition with their employer are not necessarily guilty of gross misconduct.
What should employers do?
Employers should bear in mind that general knowledge and expertise that employees have accumulated while at work is unlikely to be regarded as confidential information belonging to the employer.
5. Vicarious liability
In the case of JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust, the Court of Appeal held that an organisation can be vicariously liable for the acts of an individual who is not an employee if the relationship is like one of employment.
What does this mean?
Where a relationship is one akin to employment the ‘employer’ may be liable for any wrongdoings of the ‘employee’.
What should employers do?
Employers who are in doubt whether their relationship with someone who works for them could make them vicariously liable should take legal advice in this fast moving area and consider taking out, or reviewing existing, public liability insurance.
6. Dismissal for breakdown of trust
The Court of Appeal ruled in the case of Leach v Office of Communications, that a breakdown of trust amounted to ‘some other substantial reason’ for dismissing an employee in a case where the employing body had duties in relation to children and had received police information that the employee was considered a threat to children.
What does this mean?
A breakdown of trust may amount to a fair reason for dismissing an employee but it will depend on the facts of the case. The Court stressed that this could not be used as a convenient label to stick on any situation where the employer feels let down by an employee.
What should employers do?
When acting on third party information, including police information, about an employee’s alleged wrongdoing, employers should adopt a probing and critical approach to the information in any disciplinary investigation if the employee does not admit the alleged conduct. Specific legal advice will be wise when dismissing for the “some other substantial reason” category, particularly when breakdown of trust is in issue.
7. Social media
It was held by an employment tribunal in a recent case that an employer was vicariously liable for unwanted comments relating to an employee’s sexual orientation posted on his Facebook page by colleagues. The comments in this case were untrue but nevertheless caused the employee embarrassment.
What does this mean?
Employers will be liable for discriminatory acts by their employees towards colleagues if such acts ‘fall within the course of employment’, unless the employer can show that it took ‘all reasonable steps’ to prevent the acts from happening. The employment tribunal was satisfied that the acts in this case fell within the course of employment because they were done at work, during working hours and involved dealings between staff.
What should employers do?
Employers should have a social media policy which should be clearly communicated to all staff and should discipline staff who breach the policy.
For further information on this article, please contact Pitmans Employment team.
August 13th, 2012
The issues concerning validity of appointment, which arose following the decision in Minmar Limited v Khalastchi have been considered in a number of recent cases, most recently BXL Services Limited  EWHC 1877 (Ch).
Following the decisions in Re Virtualpurple Professional Services Ltd  BCC 254, Re Ceart Risk Services Ltd  EWHC 1178 (Ch) and BXL, where directors appoint an Administrator over a company, failure to serve Notice of Intention to Appoint an Administrator on the company, will not automatically invalidate the appointment.
The law surrounding out of court administration appointments by directors has previously been subject to much confusion. Recent judgments are contradictory and until now the law has fallen short in providing guidance to those that rely on it.
In Minmar, the Court held that the failure to serve a Notice of Intention to Appoint an Administrator on the company rendered the appointment invalid, even though there was no qualifying floating charge-holder that needed to be served. The fact that the appointment was made without the unanimous decision of the directors was an additional factor that attributed to the appointment being invalid.
Similar issues arose earlier this year, in two cases that were decided on the same day, but with conflicting results. In National Westmister Bank plc v Msada Group  failure to serve Notice of Intention to Appoint an Administrator on the supervisors of a voluntary arrangement was held to invalidate the appointment of the administrator. However, in Re Virtualpurple Professional Services Ltd  BCC 254 it was held that serving Notice of Intention to Appoint an Administrator on the company was not necessary and, even if it were necessary, the failure to give notice did not invalidate the appointment. In Virtualpurple, the Court therefore declared the appointment of administrators to be valid.
These cases were considered further in Re Ceart Risk Services Ltd  EWHC 1178 (Ch), which concerned the validity of appointment where the consent of the FSA had not been obtained. The conflict between Virtualpurple and Masada was considered, with the decision in Virtualpurple being preferred.
Accordingly, when similar issues arose again in BXL, the Court followed the decisions in Virtualpurple and Ceart. His Honour Judge Purle QC, in deciding BXL, considered and agreed with the decision in Virtualpurple, namely that failure to serve Notice of Intention to Appoint an Administrator on the company will not automatically invalidate the appointment, even if such notice is required, as the Court can validate the appointment.
However, whilst these decisions are welcome evidence that failure to serve a Notice of Intention to Appoint an Administrator on a company will not necessarily be fatal to the appointment of administrators by directors, the way in which the decisions were worded leaves open the question of whether or not a notice is required to be served. Indeed it would appear that, if the company is not served, an application to Court approving the appointment may be necessary. Accordingly, directors making out-of-court administration appointments should continue to serve Notice of Intention to Appoint an Administrator on the company, to avoid any possibility that the appointment could be invalid.
For further information on this article, please contact Pitmans Insolvency & Restructuring team.
August 6th, 2012
Since 1985 when the British Bankers Association (BBA) created and launched the London Interbank Offered Rate (LIBOR) it has become the benchmark for setting rates for a wide range of debt funding and other financial instruments.
In setting daily LIBOR rates the BBA uses data it obtains from a panel of banks for a range of currencies with differing maturities of up to 12 months. In calculating LIBOR for a given day the BBA ignores the highest and lowest rate quoted for a particular currency and the average rate of the remaining quotes becomes the relevant LIBOR rate for that day.
In some cases rates provided by a bank to the BBA may not in fact reflect the rate for a particular currency on that day as that bank may not have had any reason to borrow in it or more likely it has borrowed in it but not over the whole range of possible maturities (i.e. over night, 7 days, one month etc). Such a bank may however make reasonable assumptions based on relevant daily data it holds to be able to determine rates it provides to the BBA. This reliance on a panel of banks and their ability to assume has generated an opportunity for banks to manipulate the data supplied.
As a consequence of the well documented recent news published on suspected rate manipulation by banks (a number of whom are under investigation by the BBA and other regulatory authorities elsewhere in the world) and fines imposed on Barclays the Government announced the appointment of Martin Wheatley, Chief Executive-designate of the Financial Conduct Authority (FCA), on 2 July 2012 to undertake what is now commonly referred to as the Wheatley review.
On 30 July 2012, HM Treasury published a press release setting out the terms of reference for the Wheatley review of the framework for the setting of LIBOR.
The review is intended to set out a series of recommendations for reforming the current framework for setting and governing LIBOR and will take account of the following key issues:
- Whether participation in the setting of LIBOR should be a regulated activity
- The construction of LIBOR, including the feasibility of using actual trade data to set the benchmark
- The appropriate governance structure for LIBOR
- The potential for alternative rate-setting processes
- The financial stability consequences of a move to a new regime and how a transition could be appropriately managed
- The adequacy and scope of sanctions for tackling LIBOR abuse. In particular, it will look at civil and criminal sanctions relating to financial misconduct, including market abuse and abuse relating to the setting of LIBOR and equivalent rate-setting processes, as well as the FSA’s approved persons regime and investigations into market misconduct.
The review will also consider a range of other issues with respect to other price-setting mechanisms in financial markets.
The review timetable includes a discussion paper being published on 10 August 2012 with a stated aim to publish the Wheatley conclusions by the end of September 2012. The conclusions will then be considered by the government with the intention of legislating through the Financial Services Bill 2012-13.
Without attempting to pre-judge the Wheatley recommendations but given the very high volume of instruments and contracts existing within the financial markets that presently use LIBOR as their benchmark it may be most practical, unless it is genuinely believed that LIBOR is tainted beyond redemption, to retain LIBOR on a modified basis rather than replace it with a new system for rate setting. Devising and introducing a new system (which may not look a whole lot different to LIBOR once implemented) could prove hugely disruptive and create its own uncertainty, both financial and legal, into markets which generally thrive on certainty and could give rise to significant losses and claims.
T: +44 (0) 118 957 0488
August 6th, 2012
Despite a backlash from major UK housebuilders, Bristol City Council’s plans to introduce the government’s Community Infrastructure Levy (“CIL”) are now on course. At a public inquiry on 21 June 2012, housebuilders opposed Bristol’s proposed charges, which they argued were not based on robust viability evidence. However, the examiner has now found in favour of the Council and if the full Council votes to adopt CIL in September, the levy is likely to be brought into force by 1 January 2013.
CIL is set locally according to the amount of infrastructure that councils consider is necessary to support development in their area. It is based on the net additional amount of floorspace which is created by the new development. According to government research, CIL has the potential to raise an estimated £1 billion a year of funding by 2016.
But CIL, like Planning Gain Supplement before it, is not without its critics. Leading housebuilders, including Barratt and Taylor Wimpey, have grouped together to set up a “fighting fund,” managed by the Home Builders Federation, to tackle councils amid concerns that inflated charges in these difficult financial times will only serve to dampen development. Widespread disputes are expected to take place all over the country as councils introduce CIL, with critics complaining that councils are setting higher charges to counteract the squeeze on their budgets. The group is also challenging potential charges at the councils of Mid Sussex, Central Lancashire, Thurrock, Chelmsford, Exeter and South Somerset. Recently, Sainsbury’s successfully drove the Borough of Poole to pull its CIL on new superstores, and developers in London, already paying the London mayor’s CIL as a contribution towards Crossrail, are set to challenge boroughs introducing their own supplemental charges in the coming months.
To date, only five councils have brought CIL into force and only a further 50 have published their proposed CIL rates for consultation, despite the fast approaching April 2014 deadline.
T: 0118 957 0222
August 1st, 2012
Congratulations to Pitmans Times Decathlon Quiz winner Paul Westcott, Land & New Homes Manager at Haslams Estate Agents in Reading.
After successfully completing the quiz, Paul was drawn from a hat by Managing Partner Christopher Avery on the eve of the London Olympics.
Pitmans were inundated with applicants to the popular quiz but iPad 3 winner Paul was delighted. He commented that “initially I was shocked but this means that I can pursue a passion and love I have of maps and cartography, a topic that I considered pursuing a career in. Whilst my kids tease me over my huge collection of maps, I can now move into the digital age and explore further with the help of technology. Brilliant, thank you.”
The quiz was featured in the latest edition of the popular Pitmans Times, released in May. In its third year, the 2012 edition created quite a stir and was seen in offices, restaurants and bars across the Thames Valley.
Christopher Avery said “We’re very pleased that Paul was the lucky winner, hopefully he can pursue his passion with the latest technology. We were over-joyed by the sheer volume of entrants to the competition, demonstrating the reach the Pitmans Times now enjoys. ”
August 1st, 2012
Courtesy of Thames Valley Business Magazine July/August 2012
In these parlous economic times, more businesses are facing increased financial pressure, resulting in periods of stressful trading. In such cases, consideration needs to be given to the development of a sound strategy that allows the company to successfully continue to trade and pay its creditors.
The purpose of this article is to address some of the “tools” available to assist directors in the restructuring of a company.
“Cash is king” is a phrase we have all heard before. A steady and predictable cash flow is at the heart of the ongoing success of any business. Without it – no matter how good the company, its managers and products – the company will be unable to pay its creditors and, absent any strategy designed to address this issue, will invariably result in the company failing.
Up-to-date management accounts and accurate cash flows are required to aid any restructuring to see where overhead reductions can be made and where, and when, revenues result.
Discussions with funders should be entered into at an early stage to ensure their ongoing and continued support. An early dialogue backed with accurate financial information will usually result in temporary support even where refinancing is required. Proper and up-to-date information relating to a company’s finances, products/services and its business plan will prove invaluable in accessing new forms of finance at the correct levels.
Informal negotiations with creditors, with a view to consolidating existing or historic debt may be considered. However, such informal agreements do not legally bind creditors and it will only take one dissenting creditor to unilaterally break ranks for such an arrangement to fail.
Alternatively, if a company is struggling to pay its debts, but the underlying business is sound, a more formal consolidation of existing and historic debts through a Company Voluntary Arrangement (“CVA”) can be proposed. A CVA is a legally binding agreement between a company and all of its unsecured creditors. It is usually for a period of between 3 to 5 years and must propose a better realisation for creditors than would be achieved if the company were to enter into insolvent liquidation. In order for a CVA to succeed, the underlying business must be sound enough to support continued trading and to produce sufficient funds to service the CVA payment obligations as well as ongoing trading commitments. Once approved, it becomes a contract between the company and its creditors. However, a CVA cannot adversely affect the rights of secured or preferential creditors without their express consent.
The disadvantage of any CVA is that, save for what are described as “small companies,” there is no moratorium on creditors taking action to enforce their debt whilst the CVA is being approved. A “small company” is defined as a company that can satisfy two or more of the following requirements: (i) turnover does not exceed £6.5 million; (ii) balance sheet total does not exceed £3.26 million; and (iii) has no more than 50 employees.
In cases where the small company moratorium will not apply it is necessary to consider whether an administration is required (in order to obtain the protection of a statutory moratorium), either as a stand-alone process, or with a view to entering into a CVA. The moratorium will provide protection from creditor action whilst the purpose of, either the survival of the company, or its business is achieved.
Take early advice from a qualified professional experienced in restructuring: early advice results in a much better prospect of survival, the protection of jobs, protection of assets and ultimately the success of the business.
The golden rule of corporate recovery is, do not bury your head in the sand. The earlier you start to deal with issues, the more options you will have to successfully trade the company out of financial difficulties.
If you have concerns or queries about any of the issues dealt with in this article or wish to explore confidentially the various methods of restructuring and/or refinancing your business please contact either Suzanne Brooker or Adrian Wilmot and we will be happy to provide you with advice and assistance.