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Recent Case Study: Doing Battle in the Boardroom

In this classic case study of a boardroom dispute between the directors of a company and a senior executive director, the smooth running of the business and its reputation along with several high-value contracts were threatened. Amid numerous twists and turns, Pearson Hinchliffe’s Corporate and Employment departments’ role was to help the Board of Directors to negotiate the swiftest and most efficient resolution that the company’s legal position allowed.

The law that sets out how business decisions are taken and the process for dealing with boardroom conflicts is complex and technical; involving the set up of the company itself as enshrined in the company’s Articles of Association. Many times a directors’ dispute will either be settled amicably or, one or more directors is removed. The problem and the ensuing solution employed in this case demonstrates Pearson Hinchliffe ability to advise and act in a delicate situation which could, if not resolved with care, have lead to a serious loss of reputation and business for the company.

The issues

Pearson Hinchliffe’s client, a contractor in the construction industry on the south coast of England with a turnover in excess of £16m per annum, had grown in its scope of work and size over the previous decade placing it in a strong position in its market when the construction industry began suffering severe setbacks due to the credit crunch.

Unfortunately, tensions had flared up between members of the Board, resulting in accusations being made against one of the executive members and a bid for the whole of the issued share capital of the company by that person.

These issues created extreme difficulties which were exacerbated by one member of the Board making serious accusations against another. Roger Hinchliffe, the head of Pearson Hinchliffe Corporate Commercial team, was called in to advise, in conjunction with Employment solicitor Susan Mayall, those members of the Board on a number of issues concerning Corporate and Employment Law.

Handling the boardroom dispute

The die having been cast, there was no option other than to address the complaints against the executive director at a disciplinary hearing. Roger Hinchliffe attended those hearings to assist the Board. The meetings lead to an open and frank discussion between the chairman of the company and the executive director on a neutral site with Susan Mayall acting as mediator. After a number of hours both parties were able to negotiate a satisfactory settlement enabling the executive director to leave the company without a hindrance to his career, and most importantly, for the company’s interest to be protected and in particular to retain several valuable contracts.

The value of Pearson Hinchliffe Commercial Law’s support 

In an extremely difficult area of dispute with a possibility of huge costs and potential losses in the background, the intimate knowledge of Pearson Hinchliffe Commercial Law in the workings of its client had a material bearing on the outcome. Employment Law is notorious for the hurdles that we overcame in order to obtain a satisfactory result without undue costs. Pearson Hinchliffe’s knowledge of its client resulted in a speedy conclusion to the dispute once the issues had been identified. This case was further complicated by the executive director’s shareholding and his rights under a number of documents. This is where Roger Hinchliffe’s deep understanding of the company’s structure enabled the parties to achieve an amicable settlement with the minimum of difficulty, thus, avoiding a potentially drawn out and costly courtroom battle.

Pearson Hinchliffe Commercial Law | Hollinwood Business Centre, Albert Street, Hollinwood, Gtr Manchester, OL8 3QL
Telephone: +44 (0)161 785 3500, Fax: +44 (0)161 624 2589, Email: enquiries@pearson-hinchliffe.co.uk