Under a Financial Remedy Order, the Husband (“H”) was ordered to pay 11 lump sum payments, to total £1,115M and transfer his interest in the family home and three other properties to his Wife (“W”) and in return, W was to transfer her shares in the holding company to H.

H had failed to meet these payments as they fell due, as well as additional periodical Child Maintenance payments, and therefore full payment was due, which including interest totalled to £1.155M.

H did not have the disposable funds to pay the full lump sum. We were therefore appointed over H’s assets which included shares in a number of associated and group companies and assets, both in the UK and overseas.

Being appointed Receiver over the shareholding in a limited company in the UK means that a broad range of legal rights provided by the Companies Act, the company’s Articles of Association and shareholders’ agreement are passed to the Receiver. This would usually include the right to receive a dividend and the power to remove and appoint directors. This last option can seriously focus the mind as there is always a concern, however ill founded, that the involvement of the Receiver in the running of a company can seriously damage its long-term survival due to key staff and customers being unnerved.

At our first meeting with H he advised of an offer he had previously put forward to W. However, this had previously been rejected and therefore we set out what our options were should no agreement be made stressing, as a worst case scenario, that we would enforce the shareholder’s rights and become involved in the management of the business.

We discussed with both parties the sticking points that were making the deal unacceptable and how it might be altered to forge a successful outcome.

As an interested but independent third party we then negotiated between H and W and a solution was reached whereby one of the group companies (“the Purchaser”) would purchase W’s shares at market value.

Milsted Langdon’s Tax team reviewed the agreement to ensure that all tax requirements were met and a Share Sale and Purchase Agreement (“SPA”) was drafted which set out the terms of an initial sum and then deferred payments to W from future profits to cover the Court ordered lump sum due. As a safeguard, in case the Purchaser defaulted on the payments, a Personal Guarantee from H was included in the SPA on which W could then rely.

In the meantime, the companies undertook an exercise in rationalising their fixed assets and selling off non-core assets, such as a yacht. This, together with funds raised through refinancing, enabled H to make an initial payment, strengthening W’s confidence that H was looking to deal with matters.

Despite a three-month delay in completion of the SPA, which in turn allowed for the signing of the appropriate documents to transfer the properties, the deal allowed for a significant upfront payment and as the deal took longer than either party had intended, H was encouraged to make further advance payments. A total of £550,000 was paid to us to hold pending the signing of the agreement.

The SPA, which included a significant initial payment, allowed for ongoing staged payments to W by the companies controlled by H for a period of six years with strict default provisions to protect W in the event of default without the need for further Court applications or hearing.

Once the SPA was signed, we released the funds to W and as our involvement as Receivers were no longer required and we sought our release from the Court.