Shareholder & Partnership Disputes

Dispute background

Our client was a 1/3rd shareholder and director in a family business. He sought our advice after being excluded from the business. He had also discovered that the other shareholders had increased their salaries to avoid paying dividends.

Our client therefore considered the relationship to have irreparably broken down, and we were able to establish at an early stage that his objective was to negotiate an exit from the business and achieve a fair value for his shares.

Our approach

An immediate challenge presented itself as no shareholder’s agreement existed. The best avenue available was to assert rights under s994 of the Companies Act 2006, on the basis that the members' conduct was unfairly prejudicial to our client’s interests in the company. Our client sought an order for the buyout of his shares, or alternatively that the other members be ordered to sell their shares to him at a value reflective of their prejudicial conduct.

We initiated pre-action correspondence that was accompanied by a without prejudice settlement proposal. The proposal suggested that our client would be prepared to sell his shares and allow the other members to pay the purchase price over a 12-month period, subject to suitable personal guarantees of the members to protect against non-payment.

Dispute resolution

After some limited discussions over the price, the parties agreed on the terms for the sale of the shares. As a result, our client was able to exit the business swiftly at a fair price without having to commence formal proceedings or incur significant legal fees.

Dispute background

Our client, as the purchaser in an asset purchase agreement, had acquired the entire share capital of the target company along with its assets, consisting mainly of vehicles and machinery.

After completion of the transaction, however, our client discovered that the quality and value of the assets did not match the warranties specified in the purchase agreement. This resulted in the target business being substantially overvalued.

The matter was further complicated by the fact that our client had not yet fully paid for the business. Given that the acquisition was done as part of a wider strategy of growth and expansion, it was imperative that the asset purchase agreement remained intact in order to give effect to the client’s wider business objectives.

Our approach

Having had thorough discussions with the client to ascertain their ideal outcome, and taking early strategy considerations into account, we engaged directly with the seller in an attempt to negotiate a reduction in the remaining purchase price. The seller refused to engage. We then advised our client to issue a claim for damages for breach of warranty to apply pressure.

Dispute resolution

Soon after issuing proceedings, the matter was resolved through mediation where the seller agreed to a substantial reduction in the purchase price that actually exceeded the total value of the damages being claimed.

Our client was happy with the outcome and how we represented their interests throughout the dispute.