Problem with co-Director

[bp59]

I am a 50% director and shareholder of two companies, one of which is dormant. Recently my co-director and I have fallen out (gradually over several years) and now we don't communicate other than by email. We have attended mediation, drawn up heads of terms/settlement agreement and even though he agreed with all the conditions, he is now stringing out the process. The latest is that his solicitors are advocating him going for liquidation, relieving him from the mediation terms, and free to pursue all the company's clients. We had agreed to split the clients to give each other equal revenue to continue trading in the separate companies, and I had agreed to take dormant company providing he leaves the current premises. He is now wishing to drive us towards an unworkable mediation document by redacting his original agreements, and threatening to apply to wind up the company. This would mean that I would also suffer loss of any potential future revenues and be forced to battle for the clients from scratch, which I consider to be unfair. Can anyone clarify or offer advice on my position?

 

[Blaby Loyal]

The only way to 'force' a liquidation would be to petition the court to make a winding-up order on the grounds that it is "just and equitable".

If the company is functioning perfectly well without him and there are other factors such as employees then he'd have a hard time justifying "just and equitable".

You should be able to rely on the first settlement agreement as evidence that he has other options and opportunities to resolve matters sensibly without having to resort to the relative sledgehammer of a liquidation.

Are you owed any money by the company and so would be a creditor in the event of a liquidation?

If you are and you and can get support from the company's creditors then you could engineer it so that you get a Secretary of State appointment of a liquidator of your choice and then buy everything back from the liquidator cutting Mr X out entirely. It all depends on the value of the sums involved though.

If you are in day-to-day control of the company then make sure you remain so.

Petitioning the court costs money, same with the necessary deposits etc. to pay the Officious Receiver. Plus, strange things happen in court rooms esp. if the judge has missed lunch or someone has parked in their space.

 

[bp59]

The only way to 'force' a liquidation would be to petition the court to make a winding-up order on the grounds that it is "just and equitable".

If the company is functioning perfectly well without him and there are other factors such as employees then he'd have a hard time justifying "just and equitable".

You should be able to rely on the first settlement agreement as evidence that he has other options and opportunities to resolve matters sensibly without having to resort to the relative sledgehammer of a liquidation.

Are you owed any money by the company and so would be a creditor in the event of a liquidation?

If you are and you and can get support from the company's creditors then you could engineer it so that you get a Secretary of State appointment of a liquidator of your choice and then buy everything back from the liquidator cutting Mr X out entirely. It all depends on the value of the sums involved though.

If you are in day-to-day control of the company then make sure you remain so.

Petitioning the court costs money, same with the necessary deposits etc. to pay the Officious Receiver. Plus, strange things happen in court rooms esp. if the judge has missed lunch or someone has parked in their space.

I am owed some money (about 5k), and I am happy to follow the mediation agreement, which he also agreed to. His solicitor is engineering a situation that discredits the "bindingness" of the agreement, and is suggesting the company is brought down as a means of being released from the terms. The value of the business is low, but the value to my livelihood is greater because I am keen to continue trading and earn a reasonable living.

 

[bp59]

I have now been informed that my co-director is able to resign his directorship, start a new company and go after my clients. Is there anything I am able to do?

 

[Chris Ashdown]

Forget the history and the fight with the other part owner , start planning for a very soon break from the company and starting afresh with as many of your present clients as possible

Whilst this dispute is going on your clients will be affected and may well be planning to move anyway, You have the chance to make the break happen and explain why to all the customers, then it's up to them to chose, but you have wrong footed the other part owner and got in first

 

[The Byre]

As much as @Blaby Loyal is 100% on-the-money, as far as your legal position is concerned, @Chris Ashdown has nailed the reality in one short sentence!

Forget the history and the fight with the other part owner, start planning for a very soon break from the company and starting afresh with as many of your present clients as possible.

 

[bp59]

Thank you for your comments to date, and apologies for the delay in responding further. Another twist in this unfortunate saga is that my co-director has now physically assaulted me and threatened harm, so the position has gone up from acrimonious to physically abusive. The police have been notified and the incident reported accordingly. Is there any way I can get him out of the company because of his behaviour?

 

[The Byre]

I was going to suggest that you talk to @The Resolver on this one (it would still be a good idea and he has helped many people in similar positions) but if we are talking fisticuffs, it really is time to part ways, but I would be taking some serious strategic advice on how to do this safely and so that you can keep your client base somehow.

 

[bp59]

@The Resolver - can you please let me have your contact details to discuss please?

 

[The Byre]

Click onto the name and look at his profile.

 

[Lisa Thomas]

https://www.ukbusinessforums.co.uk/members/the-resolver.6183/