Case study of mediation in a shareholder dispute

Posted on April 06, 2017 by Jeremy Frost

The final weeks and months of a business can be stressful, often resulting in shareholder disputes.

I would like to share with you a case study of mediation between a group of shareholders and management. A case where the shareholders believed that the company’s objective weren't going to be met.

Allegations of dishonesty and potentially theft were levied by the shareholders against the management team. The management teams however, believed that the shareholders actions had not allowed the business to succeed, thereby severely damaging a number of individual’s professional reputations and livelihoods. Both parties’ allegations were serious and required a method to allow closure before the dispute got out of hand.

Clearly the parties could no longer work together, given the circumstances, it was resolved that a swift Members Voluntary Liquidation (MVL) be undertaken, to allow a liquidator to resolve the outstanding issues.

I mediated to bring the parties to the point where they understood what alleviation of their respective difficulties might look like, and how each might assist the other - this minimising the costs and maximising the benefits to both.

The result was to use the formal claim adjudication process, contained within the Insolvency Act to allow for the grievances of both sides to be valued; as a licensed insolvency practitioner, I was happy to assist with this.

You can read more about Members Voluntary Liquidations (MVL) and the associated tax advantages, here.