Author: Nikki Petken

Many employers may believe that they have the recruitment process down to a fine art, however it would seem that is not the case. A recent poll of 1256 employers* revealed the following top five deciding factors in selecting the best candidate for a job;

1. Ability to do the job.
2. Qualifications.
3. Social skills.
4. Physical appearance.
5. Hygiene.

The worrying statistic is that 67% of employers admitted to being inclined to give a more attractive person the job if up against a candidate with equal strengths. This may be consciously or unconsciously but nonetheless it is a risky subjective criteria to rely upon.

From an employment law perspective, it can easily lead to potential discrimination on grounds such as sex, race or disability. Applicants do have protection from discrimination and they are entitled to bring claims in Tribunals. As examples, a facial disfigurement is actually deemed as a disability; whilst a factor like obesity need only have a substantial adverse affect on day to day activities and be long term to qualify as a disability.

The risk is that the use of one subjective criteria can easily lead to other preferences being factored into a decision. Before you know it you would have lost the transparency and objectiveness of your decision.

The lesson to learn from this research is that an investment of both time and money in your recruitment process cannot be underestimated;

• Ensure you select your interview panel carefully and consider whether they are capable of handling the recruitment process.
• Do not be afraid to consider training anyone involved in the recruitment process.
• The interview panel should prepare their questions beforehand ensuring they are objective and non-discriminatory.
• Prepare a job description and person specification. Ensure that the panel are familiar with this and utilise these in making their decision.
• Keep records of the interviews notes for at least 6 months. Candidates often request feed-back and this is where the majority of employers slip up and claims arise.

If you have done the prep work and steps above, then recruitment should be easy. The benefits are that you are more likely to recruit the candidate that fits the role and save costs on management and further recruitment in the long term.

*Research conducted by HireScores.com

Author: Guy Thomas 

The BBC reports that the CVA proposal is very nearly with us. The meeting at Fratton Park on 6th May, three weeks back, must seem a long time ago for the creditors of Portsmouth City FC. 

Those that were there will no doubt remember the first of the Joint Administrators’ proposals “to achieve the purpose of the Administration” that they voted on. This stated: (1): Proposals to creditors for a CVA will be sent to all creditors within five business days of the acceptance of the Administrators’ proposals. Accordingly a further meeting of creditors to consider these proposals will be convened between 14 days and 28 days of the creditors receiving the CVA proposals.

Informal indications since then have been that the expected proposals were imminent. This ‘nearly there’ has now stretched out for what seems a very long time. The Insolvency Rules that govern the Administration state that the Administrator should send out minutes of a meeting “as soon a reasonably practicable”.

In case anyone is wondering how this process can be done, they would do worse then to take a look at this website set up by Brendan Guilfoyle, one of the Joint Administrators of Crystal Palace. Funnily enough that club’s meeting of creditors took place in May too. Theirs was on the 17th, yet they still manage to put up minutes of the meeting and the follow up letter to creditors.

A check of Companies House (earlier today, 27th May 2010) shows that Pompey’s Administrators found time to file the right form confirming the creditors’ committee, but oddly the minutes of what happened at the meeting don’t yet appear on the register, nor do the creditors seem to have received them.

Why would the Administrators fail to file the minutes of the meeting and why has it taken so long to send out the proposals? It seems likely that the Administrators have been using the time to seek the major creditors’ agreement prior to “committing” to a “CVA proposal”; on the other hand it could be that the points raised at the May 6th meeting gave the Administrators pause for thought. We won’t know more until the proposal is sent out and the creditors are allowed to have their next meeting. That next meeting looks set to be held sometime on June 18th. Interestingly, this is the day after the fixture list is due to be published.

Unexplained delays like this only seek to fray the nerves of creditors and fans alike and won’t make the job of the Administrators any easier at the subsequent creditors’ meeting.
Even if Portsmouth emerged from administration their fans could still face some turbulent times over the next five years. At the creditors meeting on 6 May it emerged that HMRC would prefer that any CVA the creditors approve should last just six months, during which the CVA supervisors would seek to “sell” the club to a new company. That would enable Pompey to be run under new ownership, while the ‘old club’s’ conduct in the run-up to administration would be investigated by a liquidator.
As things stand, without new funding or a different approach, the alternative will be a long drawn-out process lasting up to five years. The creditors of Pompey might also want to look at Swindon’s experience in a similar process, there a similar CVA lasted five years but came close to failing when the club struggled to meet a final year ‘balloon’ payment.

A lot can change in the run up to or even at the creditors meeting depending on the preferences of the creditors. This story still has a few more twists in it before Portsmouth and those connected to it can emerge out of the shadow of the clubs insolvency.

Authors: Julie Gingell & Simon Walsh

It was widely reported last week that Unilever, the maker of Marmite, took steps to protect its brand by threatening legal action against the British National Party to stop it from using a jar of Marmite in its party political broadcasts.

The jar of spread appeared in a BNP video which featured on its website. Nick Griffin claimed that the BNP had not been responsible for this because it had, allegedly, been inserted by “one of the people to whom [the Party] had given the broadcast to review” However, he went on to indicate that the jar of Marmite had been added to the broadcast in response to Marmite’s “the Love Party and the Hate Party” advertising campaign which has been running on television, radio and the internet. The BNP claim that the “Hate Party” was based on itself. Mr Griffin said, “Although we are not responsible for whoever it was who inserted the Marmite jars into the internet version of the broadcast, we do see the amusing side, quite simply if you start a spoof you should expect to get spoofed”.

Unilever stated, “Neither Marmite nor any other Unilever brand are aligned to any political party. We are currently initiating injunction proceedings against the BNP to remove the Marmite jar from the online broadcast and prevent them from using it in future”.

The video clip has now been removed from the BNP website but is still available on YouTube.

The BNP was involved in a similar controversy back in March 2009 when the Manic Street Preachers’ hit “If You Tolerate This Your Children Will Be Next” was played over some of its web content. After pressure was applied by the Manic’s record label, Sony, the song was removed with the BNP claiming the song had been mistakenly streamed from the site.

Brand reputation is everything and in today’s high speed digital economy, you can see why Sony and Unilever were quick to move against what they understood to be infringements of their intellectual property rights. Years of investment in PR and brand development can be wiped out if your product/brand becomes associated with an offering that is perceived to be unfavorable. Both incidents demonstrate the importance of policing the use of your brands and products, especially on the internet, to ensure that they are not used for an unauthorised purpose.

Author: Guy Thomas

It’s been reported by the BBC that Portsmouth’s Administrators have sent out a summary of its financial position to its creditors.

The Administrators have set out a list of alternative proposals for the creditors to vote on (broadly to decide how the Administration should come to an end) and published the time and place of the creditors meeting at which the creditors will vote (11am, 6th May at Fratton Park).

The report highlights an eye watering debt of over £108million. This could in limited circumstances even rise to £119 million. That’s just under a third more then initially estimated. Unsurprisingly this has been widely reported (and condemned).

Although worthy of condemnation, such reports and the creditors who read them may not immediately see one of the possible knock on effects of the behemoth in front of them.

Andrew Andronikou, the club’s administrator, has reportedly sought to damped down any response by commenting “I do not believe that the figures will come as a surprise to anyone who has been interested in buying the club,”

Andronikou went on to say that “When they [a potential buyer] do due diligence it is there for them to see. So, for that reason, the figures are vastly different from what has been reported.”

It is true that these huge figures do help highlight one of the many questions arising out this Administration.

Just what were the Directors and owners playing at, running up such a gargantuan liability for the club?

When exactly did they “know” the club was bust? Or when should they have “known”.

When you compare staff costs to the gross income then it is more then a little baffling how the clubs directors could have continued on without having taken advice as to whether the club was trading whilst insolvent. Hopefully the nature and detail of that advice (if any was given) will become clear after any further investigations have taken place.

No doubt all will become clearer, either as a result of any investigations of the Administrators (or as a result of BiS investigation into the directors. BiS is the latest funky, yet pointless name change for the old DTI or Department of Trade and Industry.

It is sad to see that, given the announced timetable it looks unlikely that the FA will approve Portsmouth’s delayed application for a Uefa licence in time for Pompey to take up their Europa League place.

One strong indication from the accounts, that Pompey were punching above their weight, is set out in the sections concerning the costs of player transfers / loans and the costs charged for lending money to the club.

Ignoring the millions that appear to have already been paid out to them before the Administration, over 15 football agents, including Pini Zahavi (the Tel Aviv based “transfer svengali”), are owed over £9 million.  A further £38.2m is due to three previous owners in the form of loans and over £4 million to trade creditors.

Balram Chainrai, the present owner, is owed £14 million, he claims his loan is secured on Fratton Park but this security has previously been queried by some creditors.

Andronikou has said “We now have a business plan in place that is a projected target over the next three to five years to pay back the creditors,”….”The creditors will get a percentage of their debts back over a number of years, rather than all in one go.”

At the proposed creditors meeting on May 6, a number of different proposals will be voted upon. In particular the offer of a creditors’ voluntary arrangement [CVA], which is essential if the club is to exit administration, will be decided upon. It may be that this vote needs to be approved before the FA will allow the Club to be listed as one of the clubs requiring a Uefa Licence.

Nothing has been set in stone but it is anticipated the dividend to be offered to creditors at the meeting (if they accept) will be in the region of 25-30 pence in the pound.

There is no official word yet as to how HMRC intend to vote but it has previously been well reported that they usually oppose football CVA’s (as a reflection of their dislike of the special status “football creditors” hold in the Administrations of football clubs).

In light of the above, it will be a happy co-incidence (for any supporters of a CVA proposal) if one by-product of the recently increased debt total (from prior reports of c. £60million) to the current c£109 level is that any opposition from HMRC will not be enough (on their own) to defeat the CVA proposal.

Without a successful vote by 75% of the unsecured creditors the CVA will fail and the club will likely be docked further points in the Championships next season.

Happy voting!

Author: Guy Thomas

Earlier today, The Times Online reported on the Vantis Group’s interim results. Particular emphasis has been placed on the impact of the firm’s involvement in the Liquidation of Stamford International Bank Limited.

Insolvency Practitioners (and their lawyers) face a difficult assessment when approaching a new appointment. Contrary to the widely held assumptions of many media and professional commentators; the acceptance of an appointment by an insolvency practitioner carries significant responsibility and potentially huge liability.

As well as personal liability for many of their actions, the insolvency practitioner must also assess the cost /benefit of funding future litigation. As indicated in the above article, one of these factors is (when faced with significant opposition from a competing stakeholder with very deep pockets) how long will it be before there is likely to be sufficient realisation for the creditors and the insolvency estate.

In this case, the ongoing tussle between the US Court appointed Receiver and Antiguan Court appointed Liquidators has spawned multiple and complex litigation across the globe.

It should go with out saying that such complex international litigation can be costly. In this case, it appears the US Court appointed receiver has rigorously sought to oppose the Antiguan appointed liquidators attempts to realise assets at almost every turn.

In addition to the obvious point concerning the management of cash flow inherent in any business, this also serves to illustrate a useful lesson for creditors and stakeholders in any formal insolvency process.

Contrary to popular belief, all formal insolvency processes are subject to potential review by the Courts, stakeholders and creditors.

Expert advice should always be sought, particularly where significant amounts are involved and again, as with any other business, litigation is often the backdrop to ongoing negotiation between the parties.

Author: Guy Thomas

Earlier this week, Brendan Guilfoyle, Chris White and John Russell of the P & A Partnership (an insolvency firm based in Sheffield) were appointed administrators of Crystal Palace FC.

This has been well reported over the last couple of days by BBC online - click here to view.

…and football fans should expect more of this type of response from the directors of struggling football clubs.

Directors of struggling companies facing likely insolvency must also take into account the interests of creditors as well as their shareholders. Other stakeholders such as fans without a direct financial interest in the company often feel they are left behind by such choices. Football clubs and the directors that run them are no different to other companies in having to strike that balance. The expectation on people who have financially supported clubs through tough times to “dig deeper” can be overwhelming.

As Brendan Guilfoyle, one of Crystal Palaces administrators said earlier this week, “This club has been in the spotlight for some months with creditors pressing for payments and players anxious about their wages.”

He went on to explain that “Our role now is to find a buyer quickly to provide certainty for the employees, players and fans for the future. We are hoping our appointment will be short-lived as we understand there are many interested buyers.”

Crystal Palace reportedly has debts of circa. £30 million. They had been listed to appear in court on January 27th to face a winding-up petition from HM Revenue and Customs over a seven figure (unpaid) tax bill.

By happy coincidence, Brendan Guilfoyle a former National President of R3 (the insolvency industries professional body) had recently published a cautionary article on recent developments in “football administrations”. Whether you are a football fan or a company director of a business unconnected to football, it makes for an interesting read and I thoroughly recommend it as an insight into the running of a ongoing trading company (such as a football club) by an administrator. Please click here to view Brendan Guilfoyle’s article.

Author: Guy Thomas

Yesterday the BBC broke news of the latest claims against Portsmouth Football Club. This week it’s Sol Campbell, the short lived Notts County player who was also recently reported as having signed a new deal with Arsenal FC. Click here to view the article on the BBC.

Football clubs are no different to any other businesses in the need to keep a tight rein on their finances during a recession.What is “different” about them is the intense and sometimes intrusive public scrutiny that they are under compared to other companies of similar turnover. This scrutiny applies double if the team is not perceived to be performing on the pitch or the choices of the management are not supported by the fans.

“Increasingly, matters off the pitch are taking centre stage in the media’s mind as they seek to tell the full story of what is taking place on it” says Paul McGoohan, Sports Director of Square1 Consulting, who have advised a number of Premier League and Championship Clubs. “The media’s thirst for information and the emotive subject matter mean that is essential for executives to get the right message into the public domain. Good legal and communications advice can help club executives in successfully managing this process and ultimately assist in not losing the public battle.”

I agree with Paul’s points above; It is a truism of a financial downturn that when a company is perceived to be “in trouble” that its troubles are doubled. It is for this reason that football clubs and their stakeholders routinely employ PR consultants to work alongside their legal team during difficult times.

My top tips (below) can apply to Football Clubs, but are also transferable to any business:

1. Communicate with stakeholders and creditors concisely and accurately.

2. Don’t hide - its not going away and may get worse if you do nothing.

3. Keep on top of the “message”; if you lose control of it then you risk losing your company’s goodwill and hard fought business relationships.

4. Take advice to address the root problems. Good communications can only buy you time. Use the time wisely to address the problems behind the immediate crisis.

5.  Act quickly – try to get your message in before the rumours start.  Efficient communications with stakeholders and creditors engenders trust and can provide a useful foundation when the time comes to implement solutions and take your company forward.

Author: Gary Dunger

I’m sure you have all been eagerly anticipating the report on the Willow Foundation 10K run and our runners’ performances!

In very testing conditions everybody put in a very good performance and despite survival being the main aim, some very creditable times were put in, especially considering that by the end of the race the surface was becoming somewhat slippery (being partly run on grass) and into driving rain, wind and hail.

A special mention must go to Nat Young whom it seems must have been training very hard over the last few months as he went off like the proverbial hare, only to be reeled in by Terence two-thirds of the way in with Terence coming in first of the SA Law runners. 

The finishing order on Sunday was:

Terence Ritchie       46.36
Gary Dunger           47.03
Nat Young              47.06
Rob Ryall                52.12
Chris Alexander     57.54
Simon Walsh          58.23
Tracy Lacey-Smith 59.09
Nikki Petken           65.36 

I am sure you will all join me in congratulating all those who participated, and many of whom are no doubt now saying “never again” after the experience. 

For a full (humorous) account by another participant of the challenges yesterday see the RunningAmok blog.

And it is not too late of course to sponsor the team, visit www.justgiving.com/SALaw, it would be great to reach £1000!

Author: Guy Thomas

“Moaners” who “lived in unrealistic Disneyland”. In typical headline-grabbing style, Alan Sugar, Lord of the Fired, Business Guru and government Enterprise Champion, was recently reported in The Times laying into owners of small businesses who have been blaming banks for their difficulties.

It is unsurprising that his comments, made when speaking to a delegation of 300 small and medium business owners in Manchester, have come under fire from the Federation of Small Businesses, Politicians and  business owners themselves. It’s too early to tell if this “kick up the backside” style of motivation has had an effect on how these firms will approach their banks in the future, or how owners of small businesses will feel about Alan Sugar’s comments, but I can tell you that it is not a balanced view of the situation.

It can be argued that Sugar is simply out of touch with the SME market . Through our involvement with a variety of business clinics, we see many viable small businesses befuddled by lending practices and unclear on the right formats and accounting information that the banks require. In this climate it should be a priority of the banks and the government to educate small business borrowers in the mechanics and realities of business loans and what funding options are available. Business Link plays a very positive part in meeting this need for education, as do some banks, but more can and should be done to encourage small business borrowers to be both smarter and more effective advocates for their businesses.

Of course, there will always be firms that are too high risk to be safely lent to, and it would of course be irresponsible of the banks to do so. But there is a large number of the small businesses and start ups that we encounter and advise that are run by passionate, driven and motivated individuals, who have, for the most part, sound business plans and a solid offering. Many of  the businesses we are seeing aren’t going to their banks in need of a ‘life-raft’ or because they are bust or have mis-managed their business. They are going to the banks for financial support to fulfil orders, for a quick injection of cash that will allow them to eventually grow their businesses and are on balance a good long term investment.

Alan Sugar also comments “I hate the use of this word cashflow in the sense in that it is a business problem”. What he is perhaps failing to understand is that “cashflow” in this economy is a business problem originated by issues in the supply chain and customer network, opposed to financial miss management. We are advising our clients to deal with these issue in their supply chain and customer network head-on, by making sure they have contracts in place and that they are enforceable. We are also advocating that our client be “customer careful” and  really get to know their customer base. But not simply as a way of strengthening their relationship or for business development but as part of their risk management strategy. By gaining a clear understanding of which organisations your customers supply and are dealing with allows you to expose potential areas of danger in your wider network.

So would many of these “moaners” be better off in insolvency as Sugar a ledges? Well, insolvency is, and always should be the last resort. We have a large SME client-base, and have seen more recently an increase in insolvent businesses and even more “tittering on the brink”. The key to avoiding insolvency is to take action immediately, as soon as you feel their might be a problem. By working together with your Accountant and your Lawyer there are usually reasonable alternatives to simply “going bust” .

No doubt Lord Sugar intended his comments to motivate as well as admonish, it’s just a shame he has chosen, on this occasion, not to act as more of an advocate for small businesses, after all the SME account for 99.9% of all enterprise in the UK.

Author: Helen Duffy

Whilst reading the Sunday Times on the weekend I came across an article reminding me of the dangers of Facebook.

According to the article, someone referred to as ‘Lindsay’ forgot that her boss was a ‘friend’ of hers on Facebook when she wrote “I HATE MY JOB - my boss is a total pervvy ****er. Always making me do stuff just to **ss me off!”

So later that day her boss responded to her comment on Facebook, reminding her that she was still on her six month probationary period and told her not to bother going into the office the following day.

Whilst this is a sobering reminder of the risks of Facebook, employers should also be careful about conducting their disciplinary procedures through such means.  It seems in this case that ‘Lindsay’ was still within her first year of employment, but had she been employed for longer, this kind of response from her employer could have landed him in an employment tribunal.