Unfair Prejudice Claim and Dispute Settled

Our clients, co-directors and shareholders in an established electrical installation business serving the North-West, faced an unfair prejudice petition under s994 Companies Act 2006 in the High Court seeking to force them out of the business that they had built on the other side's terms. We secured a commercial settlement that released our clients from all claims, delivered a substantial payment for their shares, and left them free to grow their new venture without restriction.

Context

After the working relationship between the parties irretrievably broke down, the other side (“the Petitioners”) launched an unfair prejudice petition under s 994 Companies Act 2006. This is a litigation route commonly used where there are allegations of unfairly prejudicial conduct, and the Petitioners specifically asked the Court to order our clients to sell their shares to them or to the company at a price fixed by the Court.

Our clients had already stepped back from their operational roles and were setting up a new electrical contracting business, which was already performing well. Whilst our clients were determined to defend the claim robustly, they were clear that they did not want to be involved in drawn-out litigation that would incur significant cost and time that would detract from their new commercial operations.

Challenge

Unfair prejudice petitions are notoriously complex and time-consuming. Litigation can potentially run for years, generate significant legal and expert costs, and end in a court-ordered share sale on terms that neither side truly controls.

We saw the case commercially, not only legally. The other side's ultimate goal was to end up owning 100% of the equity in the company which meant, one way or another, buying our clients out. Our clients had already indicated they were willing to sell their shares to the company and exit without delay given the deadlock in shareholder decision-making as a result of the dispute. If the litigation ran to trial, the Petitioners stood to spend hundreds of thousands of pounds in legal costs only to arrive at the very outcome our clients were offering from the outset.

Solution

We used the commercial reality and legal risk to the Petitioners to reset the negotiation and reached a settlement on terms that worked for our clients:

• Full release from every claim brought against them.

• A substantial payment from the company in exchange for their shares.

• A clean exit, with no ongoing restrictions on their new business.

• Trial risk and years of cost and disruption avoided.

Impact

The settlement delivered exactly what mattered to our clients: cash for the value of their shareholdings and the commercial freedom to build the next chapter of their careers on their own terms.

By settling the claim before substantial litigation took hold, our clients:

• Preserved capital that may have otherwise been spent on litigation for several years.

• Protected their team, clients, and reputation from the uncertainty of a public trial.

• Kept the focus, momentum, and confidence needed to grow their new venture.

• Turned a hostile unfair prejudice petition into a clean commercial exit on favourable terms.

How Taylor Rose can help you

This case reflects what our Commercial Litigation and Insolvency team does best: reading shareholder disputes as commercial problems, not just legal ones, and finding the shortest route to the outcome the client actually wants. If you are facing a shareholder fallout, an unfair prejudice petition, or a breakdown in a business relationship, we can help you protect what you have built and move forward with confidence.