Getting your ducks in a row: Expert advice for new business owners
Apr 12, 2023
I’ve seen so many businesses where things were rosy at the beginning but decidedly less rosy at the end.
Re The Whitehall Partnership Ltd [2023] EWHC 596 (Ch).
In this case, a couple hit the dreaded ‘shareholder deadlock’ where the voting rights in the company were equal and they had no provision to address deadlock.
One party had applied to the court claiming minority prejudice but withdrew that petition and instead petitioned to wind up the company arguing that it was just and equitable to so do. (One of the remedies available to the court in an unfair prejudice case is to order that one party buys the other party’s shares – obviously resolving any deadlock issue).
The judge wasn’t impressed by the petitioner’s evidence, suggested that the unfair prejudice petition would have been the ‘ideal forum’, he should have pursued that route first, and the petitioner had not come with ‘clean hands’. The petitioner’s motive was a key issue. The petition was dismissed.
I have seen many letters threatening petitions for unfair prejudice and often also threatening winding up. These are complex cases.
It is trite but true that each case turns on its particular facts. It’s a reminder of how unpredictable litigation can be.
