Taylor Wessing has compiled a detailed guide for directors and business owners which provides guidance on the proactive steps which can be taken to protect against counterparty and third default, as well as how to respond quickly to protect your business if a counterparty has already or is about to default. Details of how to order a free copy of the guide are below.

No matter how well your business is doing, it can still be vulnerable to the knock on effect of financial difficulties being encountered by third parties. The insolvency of a supplier or a major customer can leave any business financially exposed.  For example, if your supplier defaults you may in turn face potential claims from customers whose orders cannot be met, loss of custom for delays and loss of economic value.  Or if your licensor is insolvent you may not be able to exploit intellectual property rights that are key to enable you to continue trading.

Businesses in all sectors and of all sizes should, as far as possible, take proactive steps to insulate themselves from the effects of counterparty default. The Safeguarding Your Business guide can help you. It covers the following topics:

Proactive planning - Contract terms

  • Form of contract
  • Applicable law
  • Payment terms
  • Retention of title
  • Assignability
  • Intellectual property rights and data protection
  • Information rights
  • Pensions – considering the impact of contracts on pension scheme obligations

Proactive planning – Security

  • How security improves your position
  • Forms of security including quasi security rights
  • How insurance can assist

Proactive planning - Contingency planning / living wills

  • Planning ahead in case the worst should happen

Proactive planning – Corporate simplification

  • Why simplify your structure?
  • Ways of dissolving companies and advantages and disadvantages of each method

Reactive planning

  • Rights against others before and after they enter an insolvency process
  • Rights against a dissolved company
  • Rights against a company's directors
  • What to do if you are a director of a company which is facing financial difficulty as a result of another's default

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.