PerfectCustomPapers | Distribution agreement between your company and London Distributors Ltd.

Distribution agreement between your company and London Distributors Ltd.

During the distribution agreement between your company and London Distributors Ltd., both
companies collaborate to create a new trademark. The London Distributors Ltd registers the
trademark in the UK and uses it on communication channels, particularly social media. What are
the issues here? What are the courses of action, and how can this be resolved?
5.- In October 2020, you incorporated a company (Your company name) that specialised in
(your chosen activity). You were the company’s only members, each owning 100, equivalent
to £1 per share. You were the company’s only directors.
For the past six months, the company has been experiencing financial difficulties. In May
2022, the company’s overdraft with the Bank plc had reached its limit of £250,000. In return
for increasing the overdraft limit to £300,000, the Bank plc demanded security and took a
floating charge over all the company’s assets. The business continued to struggle, and in
October 2022, you were informed by the company’s auditor that insolvent liquidation was
inevitable. However, you disagreed and held out hope that the company’s financial
prospects would improve. You decided to try and trade their way out of their financial
difficulties by having a sale. Unfortunately, the sale failed to increase business, and in
December 2022, your company was wound up. By this time, the company’s overdraft with
the Bank amounted to £290,000.
A liquidator is appointed and has discovered several disturbing facts (i) in April 2022; you
caused the company to repay an unsecured loan of £5,000, which one of you had made to
the company some months before; (ii) in addition to the money owed to the Bank, the
company owes £10,000 to the Tax authorities, £30,000 to employees in wages, and
£100,000 to unsecured creditors.
The liquidator estimates that the total remaining assets of your company amount to
£150,000. Liquidator’s expenses in acting as liquidator amount to £3,000. Advise the
liquidator.
Because of the knowledge that you have gained in this course, you are going to discuss the
following:
1.- the role of the liquidator,
2.- how to best swell the pool of assets and
3.- who is entitled to those assets, and in what order?

Sample Answer

Issues

The main issue here is that the London Distributors Ltd registered the trademark in the UK and uses it on communication channels, particularly social media, without the consent of your company. This is a clear violation of your company’s intellectual property rights.

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Courses of action

There are a few courses of action that your company can take:

File a trademark infringement lawsuit against the London Distributors Ltd. This would be the most direct way to protect your company’s intellectual property rights. However, it can be a costly and time-consuming process.
Send a cease and desist letter to the London Distributors Ltd. This is a less formal way to demand that they stop using the trademark. If they do not comply with the cease and desist letter, you could then file a trademark infringement lawsuit.
Negotiate with the London Distributors Ltd. You may be able to reach an agreement with them to allow them to continue using the trademark in exchange for a licensing fee.

Resolution

The best way to resolve this issue would depend on the specific circumstances. If your company is willing to spend the time and money to file a trademark infringement lawsuit, then that may be the best course of action. However, if you are looking for a more speedy and cost-effective solution, then sending a cease and desist letter or negotiating with the London Distributors Ltd. may be better options.

The role of the liquidator

The liquidator is a person appointed by the court to wind up the affairs of a company that has gone into liquidation. The liquidator’s role is to collect the company’s assets, pay its debts, and distribute any remaining assets to the creditors.

How to best swell the pool of assets

The liquidator can take a number of steps to try to swell the pool of assets, such as:

Selling the company’s assets
Collecting outstanding debts
Challenging any invalid or unfair transactions that the company entered into before it went into liquidation

Who is entitled to those assets, and in what order?

The order in which creditors are paid out is as follows:

Preferential creditors, such as employees who are owed wages and the government for taxes
Secured creditors, such as the Bank plc, who have a security interest in the company’s assets
Unsecured creditors, such as your company

The liquidator will pay out the creditors in accordance with this order, until all of the assets have been distributed. If there are not enough assets to pay all of the creditors in full, then the unsecured creditors will receive a pro rata distribution.

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