20 December 2011

Wedgwood collection available to creditors

Sad news for The Potteries, the five towns of North Staffordshire famous for their manufacture of china tableware and ceramics and the setting for most of the novels of Arnold Bennett.

Over the years, many of the works have closed and the great names disappeared, or moved production to the Far East. One famous name, Wedgwood, is still trading, but it is insolvent and there is a big hole in the workers' pension fund. The trustees of the fund could get some relief from the Pension Protection Fund, but only after trying to get as much as possible from the Wedgwood insolvency, in which the pension fund is the major creditor.

As early as 1774, it was decided that samples of every product from the factory should be preserved and so there is a Wedgwood Museum with a fine and valuable collection.  Unfortunately, the five employees of the museum were also in the same Wedgwood pension scheme, making the Museum Trust jointly liable for £134m and so also insolvent.  The question, on which the High Court ruled yesterday, is whether the collection belongs to the Museum Trust outright, in which case it must be available to creditors, or whether it is held in trust for others, and so protected.  The court has decided that the collection is not held in trust, and so is available to benefit the Wedgwood creditors.  As a result, the collection will probably be sold.

The lesson is obvious.  The museum and its collection should have been kept apart from the rest of the business, whereas the common pension arrangements were its undoing.  There are many other small museums attached to industries and other institutions, and they would be well advised to check their ring-fencing.

Art and money laundering

The bane of every English lawyer's life is having to deal with the requirements of the Money Laundering Regulations.  These hail from the EU, but were adopted and expanded with enthusiasm by the last government. 

For every new client, we have to establish the identity of the client and, if the client is a company or trust, the identity of those who control or beneficially own the client.  Original or certified copy documents showing addresses, such as utility bills, and official photographs, such as passports, are required.  Failure to carry out these checks can have serious criminal consequences for the lawyer or those responsible for compliance, and so they can not be avoided.  For a commercial law firm with international clients it can be very difficult to identify those companies, organisations or beneficial owners, and that is particularly so when acting for the owners or purchasers of art.