Help needed - Any company or copyright law buffs? Or small business experts?

[fatcats]

Hello there

I'm just hoping for some advice, and that there might be some company law or copyright law experts lurking that can offer a few nuggets of wisdom. I?ve tried to explain this scenario as clearly as possible so apologies that it?s still so longwinded.

Anyway, here goes:

I?m a sole trader in a creative field. A representative from Brand A, which is a start up, commissioned me to do some work for them at the end of last year.

I put a lot of work in, they made a lot of extra requests, I complied with them all and sent them the invoice. At which point they began to ignore my emails and calls. I could see from looking on the brand?s website and googling its name (for PR activity) that the people behind this start up have been using my work since at least January. In fact they are still using it today.

I periodically chased the invoice via my original contact but was ignored, so in June I threatened legal action. Suddenly he replied, apologising and saying he was only a consultant for the firm and assumed I had been paid. Gave me another name to chase. To cut a long story short, a few days later I receive an email from an investment company saying the parent company for Brand A (this parent company had never been mentioned to me before) is insolvent so can?t pay my invoice. The investment company is apparently helping with the restructure of Brand A.

On Companies House the parent company mentioned is still showing as active. There is also another company, set up in April, which has almost the same name as Brand A and the same director. I queried the relationship between the two companies with the investment company as Brand A still appears to active (website still up, director going to conferences in June to give presentations ? uploaded to Youtube - about how the brand is going to be worth 100 billion dollars by 2020 etc) My email requests for further info has been completely ignored. There is also no registered company name or number on Brand A?s website.

I assume that the new company has been set up to help Brand A dump its debt and start over. I know this happens, however, the new company was set up in April and Brand A has been using my work continuously up to the present day. The new company has just filed a statement of capital in the region of high 7 figures at Companies House.

I would like to take legal action as I obviously want to be paid as agreed but I also feel that this behavior is tantamount to theft. My problem is if I take the old company to court they will probably wind the company up anyway. If I take the new company to court I believe they will say the work was commissioned by the old company. However, to reiterate they are still using the work I created for them, despite knowing that they can?t or won?t pay for it.

I basically don?t know where to go from here and am hoping there may be some legal brains who wouldn?t mind tipping me in the right direction.

Would be really grateful for any help.

Just to add that I own the copyright for work I created for the company. I never agreed to waive my copyright, even if my invoice had been paid. I am therefore also considering action for copyright infringement but don?t know which road to go down.

[Burbage]

This is not legal advice. But it's probably as good as any you'd get by asking on an internet forum after beer o'clock.

I suspect you've just paid your school fees. In return for which you have learnt some useful things about the state of the nation's booming 'creative industries':

1) Everything is done through subsidiaries, often behind trading names.

2) Parent companies aren't liable for the obligations of insolvent subsidiaries.

3) This is why everything is done through subsidiaries. If a project doesn't work out, or they just don't fancy paying suppliers, they can fold at the drop of the hat and, short of finding out who the liquidators are and putting yourself on the list of creditors, there's nothing you can do.

4) You can help yourself by never doing anything without a proper Purchase Order, in advance, on the letterhead of a company that actually exists, is preferably registered in the UK, has directors that haven't too many insolvencies in the past and, if they work out of by-the-hour offices, have names the receptionist can remember.

5) Agree payment milestones alongside project milestones.

6) Send invoices promptly at every milestone.

7) Follow up with statements of account. Do not be afraid to harry the finance person/people. If there aren't any, walk away swiftly.

8) Hope everything turns out lovely.

Legal action is possible. The new company can't prove the provenance of the work you did, and can't show that they bought it fairly, so you've got a case against them for breach of copyright. If you can prove that you did the work they're using (i.e. you have something plausible in writing commissioning you/thanking you for the specific work in question), and the new company hangs around for long enough, then mediation is the way to go, following up with court action if that doesn't work.

Be aware, though, that the new company is as liable to collapse on itself as the last one (it might have capital listed, but that doesn't mean it can't squirrel it off to another subsidiary at the drop of a hat), so check the history of the directors. 'Restructuring' is often a bit of a euphemism for effectively stealing money from creditors, by way of murky networks of other companies, and if they run this sort of scam fairly often, then it's a fair bet they'll not be afraid to do it again. 'Investment companies', incidentally, aren't really there to responsibly nurture sustainable start-ups as the brochures claim, they're there to get what they can, usually by 'extracting value'. You've just discovered where they extract that value from, so don't expect them to pretend to be shocked, or even bothered, that one of their sheep has gone fleecing.

It's sad that you've been stiffed by a bunch of talentless graspers but, as many of us are eventually forced to realise, they're talentless graspers who, through nepotism, magic or fraud, have got their hands on enough other people's money to kick off another round of their hip little scam. You, on the other hand, haven't. You have to work for your money, and that means, inevitably, working for talentless graspers who'll stiff you, at least from time to time.

As another sole trader in the creative industries, I am truly sorry for your loss. But I'm also entirely unsurprised. It's happened to me, and to almost everyone I've worked with, one way or another. I sometimes think it would be nice if the world wasn't quite so full of shafty bastards, but then I remember that if it wasn't we'd have no advertising, no marketing, no branding and precious little finance, and what sort of world would that be? All the same, it would be nice if it was occasionally clouds and silver linings, rather than frying pans and fires.

[Seabag]

How much are you owed ?

?5k +?

You could go to court and file papers on them, via the mayors court in the city. They hold many self represented cases.

You can also file a cease and desist letter on the work they're using too. Often the very fact of 'actually' going to court is enough to kickstart people into action.

I've been into this court and against a very large law firm, the judges are pretty wise to the shinanigans of these shisters. But it does drain you emotionally, no matter how right you are.

And to do this you'll need to get into character. Be very clear with what you want, build a timeline and know how and when to file with the court.

Send everything by registered post and be right on the case.

Have a strategy if they want to settle.

Have a strategy if they say they want to come to court.

Have a strategy if they actually turn up, as many do and many more don't.

Have a very clear set of papers for the court, showing time lines and how you've tried to resolve the issue.

The judges don't expect you to be a lawyer, but they expect you to be on-time, clear, organised and concise and in triplicate. Make sure you're the first into the court room, say good morning/afternoon to the judge. Ask where to sit, be engaged, be calm and quietly confident. First impressions count here. They are judges, judging you as much as the evidence.

And barristers (if they come) don't like self rep, it throws them, the judges are pretty good and human.

But as I said, it will drain the hell out of you. Mine dragged on for 6 whole years, and yes I got my point across and 'won' but in hindsight, I'd not built in the pain of the journey it can take you on.

And lastly, morality, shame, guilt, feelings, revenge, and justice are all well and good. Just don't expect any of these to feature in any relevant way. Just chase the money if that's the issue at hand, if you can afford it. If not, then wipe your mouth and write it off.

It's a harsh world out there.

[fatcats]

Thanks both of you for your help.

Burbage, thank you so much for the mediation link, that's really helpful. I did have to smirk about the school fees comment as well. I am not new to freelancing but this is the first time that it has happened, believe it or not. Clearly, I have been fortunate up to now. I suspect they will ignore any attempts at mediation but at least I can keep the ball rolling and the momentum up.

The director seems to have a history of opening companies and closing them again so your words of warning are well founded.

Seabag, its more in the region of ?1k. I know to many people that's not a lot of money but it is significant to me. Plus it's as much about the principle as they are still blatantly using my work. My rough plan was to go via Small claims and file online at Moneyclaim. Thank you for all the advice about going to court. I know that even if I am successful in court it is no guarantee that the company will pay up.

My third option that wouldn't necessarily get me paid but might be the quickest and most painless is to draft a letter threatening to report the director's conduct as being unfit (which it is in my eyes). Give the director advance warning and sight of the letter. I have read up on unfit conduct but not quite sure my case is strong enough. I know some people don't give a hoot about being disqualified as a director and carry on regardless, but I'm hoping that ego might be a good prompt here, the guy in question is fairly young and it's a new company after all.

Would appreciate any feedback on this. Meanwhile I'll get reading that mediation link really thoroughly.

Thanks again for taking the time to read my essay and reply, really appreciate it.

[Seabag]

?1000 is a sum of money I'd not want to lose. But what I'd say here is not to get caught up in the 'game' of trying to get revenge in some way. And work out how many hours of time created that billing, because you'll be spending way more time again on the whole saga.

The thing is if you're really honest, is that you're pissed off with yourself. At your naivety and at someone having you over, and you're right in wanting to do something about it. But don't take some much time and energy that you really can't afford, it drags you down and kills the creativity.

If I was you I'd spend time in making sure my comercial engagements were more formal, and things get signed before you do work. These are the more boring but ultimately productive things your business will need for the future.

And shite Directors like these do not care what you say or think, they are risk players and they play people to the limit, and if it all looks stacked against them, only then they cough up.

Or go hard and go to court, but that's a risk and you're playing someone who's aware of that. And for ?1000 which when you start taking the time and energy, isn't actually a lot to play with

[Salsaboy]

Can you visit their address and 'picket' the company with some large signs? Obviously not saying anything too defamatory.

Or order a stonking great amount of pizzas to be delivered, cash on delivery.

[Robert Poste's Child]

I don't have a legal background but their behaviour sounds fraudulent.

Would it be worth one final attempt, in the form of a letter, sent recorded delivery and headed 'without prejudice', stating that unless they settle your invoice within fourteen days you consider they are in breach of copyright and will take further action?

I completely sympathise with how you feel, but if the letter fails, perhaps best for your sanity to remind yourself what an hour of your time is worth and devote your efforts to recouping the loss via a more reliable customer.

[fatcats]

Thank you all. Some great advice here, I need to read up on the mediation link properly I think and take it from there.

RPC - yes am considering that also.

Thanks everyone for taking the time to read everything and post. Can't have been the most thrilling of reads so I really appreciate it.

ETA - I know what you're saying about the opportunity cost of spending hours pursuing this and it's a very vaild point.

[njc97]

The can't just transfer all the assets out of company and leave the debts behind. As Burbage said, you need to be clear which company you engaged with. If that company is being "restructured" and is insolvent, then they should have appointed administrators and posted notice in the London Gazette. Eg:

https://www.thegazette.co.uk/notice/2584431

If Company A is insolvent and unable to pay its debts, then the adminstrator will try to get best value from its assets (e.g. Brand A, the value of your work) and pay as big a % of Company A's debts (yours) as is possible. Key is that they have to treat all creditors fairly.