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
Because of the knowledge that you have gained in this course, you are going to discuss the
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?
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.