Shareholder dispute – Childcare centre owner is almost frozen out of his own company
Our Clients: Childcare Centre Owner in a Shareholder Dispute
Our Client – Andrew (Childcare Business Owner)
In this case study, our client is an absolutely terrific guy. He is a hardworking family man who spent about 20 years building up the value of the childcare business that he had developed with his co-partners. Unfortunately, the people that he built up the business with decided to freeze him out, so he was put in a position where he was potentially excluded from all of the value that he had developed over 20 years.
Our client owned one third of the shares and he was also a director, so that meant he was at risk of being excluded from management with his minority ownership position.
The other party (the other directors) decided to engage a very aggressive counsel who went at his throat and developed all sorts of schemes to try and cut him out of the business itself.
There were 20 companies, a lot of trusts and a lot of real estate assets. This was a $20 million enterprise. It took a lot of time and a lot of effort and about a year of litigation before a settlement was reached where there was an amicable separation of assets.
How Sewell & Kettle Lawyers Helped
Firstly we undertook due diligence to understand all the contracts and relationships between the different entities in the corporate structure. There were about 20 companies.
Then we represented the client in Supreme Court proceedings to push his case forward and object to the discriminatory restructuring that had been undertaken by the other directors.
Then we undertook direct negotiations with their lawyers and worked towards a settlement which was fair but protected our client’s interests.
Takeaways For Others
The good news from this case is that good guys can win in the end. Andrew was able to protect the 20 years of value that he had built up. On the other hand, this could have all been avoided if at the start of the relationship with his partners he signed a shareholders agreement which gave him adequate protections for his minority position.