This Practice Note provides an understanding of what might cause a law firm to fail and what the bank will be looking for if it is to continue to support the business with additional finance. The rationale for cash flow forecasting The short-term risk in all law firms is that they could run out of money, potentially causing the business to collapse. Law firms often have relatively poor cash flow from clients but pay out expenses fairly quickly, so they are particularly at risk if cash flow is not managed properly and the business has insufficient capital. The most likely times for a law firm to fail are when starting out, when expanding rapidly or when there is a sudden but significant drop in fee income. If cash flow forecasts are prepared and updated regularly the business should be able to identify in advance the times when: • it will have surplus funds, and/or • additional external finance may be needed If this can be planned for, there is more

When the debtor cannot pay debts as they fall due, see Insolvency Act 1986, s 123(1)(e).

• Any person to whom notice of the application has been given may attend and make representations at the hearing. • The application is treated as a complaint so the applicant is a ‘complainant’ and the respondent is the ‘defendant’. The rule does not provide for a warrant of arrest to be issued in the event of a failure to appear. • Order of evidence and speeches: ◦ complainant may address the court in opening and

Insert the following definitions as new definitions into clause 1 of Precedent: Share purchase agreement—pro-buyer—corporate seller—conditional—long form: 1 Definitions and interpretation Acceptance Period is defined in paragraph 1.4 of Part A of Schedule [insert schedule number for Net Debt Statement and Intra-Group Debt Statement]; Actual Net Debt means the Third Party Debt less the amount of Cash at Completion, as set out in the Net Debt Statement and determined in accordance with Schedule [insert schedule number for Net Debt Statement and Intra-Group Debt Statement]; Adjustment Payment Date is defined in clause [3.2 OR 3.3]; Buyer’s Accountants means [insert name] of [insert address]; Cash means all cash or cash equivalents in hand or credited to the account of or held in any account on behalf of [the Company OR any Group Company] with any bank, financial, credit, lending or other similar institution (together with accrued interest) including securities with a maturity of less than 12 months that are readily convertible into cash, cash in transit, sums receivable pursuant to uncleared cheques or other methods of payment to [the

Where a target company/target business is acquired free of surplus cash or any debt. The parties will want all of the target's external debts to be repaid on completion and the seller will extract any cash which is not required in the business prior to completion. Allowing the seller to extract surplus cash will avoid the buyer having to pay stamp duty on that part of the purchase price which equates to the surplus cash.

Money held on deposit to which interest is added – like a building society account.

Cash leakage in a leveraged finance context is used to refer to a situation where cash, which could be used as working capital by the business or used to meet finance commitments, leaves the obligor group. Most leveraged acquisitions are made on the basis of the cashflow of the business rather than asset value meaning that keeping cash within the business is important to preserve value. As a result, a leveraged finance facilities agreement will typically attempt to restrict cash leakage by, for example, restricting dividends, payments of capital to investors, making of loans etc.

An offer for the shares of the offeree where the consideration is in cash. A cash offer, or cash alternative, is required under Rule 11.1 where an offeror and its parties'>concert parties acquire for cash, in the 12 months prior to the offer announcement or during the offer period itself, interests in offeree shares carrying 10% or more of the voting rights. A Rule 9 offer must be in cash, or be accompanied by a cash alternative.

An offeror (or potential offeror) which has announced, or in respect of which the offeree has announced, that its offer is, or is likely to be, solely in cash. A non-convertible debt instrument will normally be treated as cash.

An offer of new shares made to a group of investors (who may not be existing shareholders) selected by a placing agent, who subscribe in cash (such offer generally takes advantage of an existing disapplication of pre-emption rights, most likely passed at such company's last annual general meeting). It is the quickest and simplest method for a company to raise capital (for whatever purpose) since it does not involve the publication of a prospectus or require shareholder approval and is therefore a good funding source for smaller acquisitions.

1 Physical cash can facilitate anonymity and may increase the risk of money laundering. Large payments made in cash may be a sign of money laundering, terrorist financing or proliferation financing. There may be legitimate reasons for a [customer OR client] to use cash, but the source and rationale for the cash should be capable of explanation. 2 You must not accept any funds (cash or otherwise) from a [customer OR client] until the [customer OR client] due diligence (CDD) process is complete. 3 There is no regulatory cash limit, but our cash policy requires that you do not accept cash[ over the limit of £[250]] either

Introduction to cash seizure powers under POCA 2002 Part 5, Chapter 3 of the Proceeds of Crime Act 2002 (POCA 2002) covers the recovery of cash in summary proceedings in England and Wales and the associated powers of search, seizure and forfeiture of cash. Despite cash seizure and forfeiture proceedings being heard in the magistrates’ courts, these proceedings are civil in nature rather than criminal. As a consequence of this, it is for the applicants to prove their case to the civil standard of proof—the balance of probabilities—rather than the criminal standard of proof. Also, in contrast with criminal proceedings, the focus of the proceedings is the property itself rather than the culpability of the person holding the property. There are complementary powers, similar to the existing cash seizure and forfeiture scheme, for the recovery of listed assets like precious metals and jewels, (POCA 2002, Pt 5, Ch 3A) and seizure of monies held in bank accounts (POCA 2002, Pt 5, Ch 3B). See Practice Notes: Recovery of listed assets under the Proceeds