Early Dispute Resolution – Shareholder Dispute

Background

Founding shareholder directors of a group of companies operating in the hospitality industry were concerned about whether the expenses charged to the group over a number of years by a fellow founding shareholder director were reasonable given the nature of its various business activities and the scale of its operations.  

The concerned directors initiated discussions on the issue with the director in question. This resulted in considerable disagreement and the prospect of a dispute involving legal action (legal dispute).

To limit, if not avoid, any business disruptive, time-consuming and costly consequences of a legal dispute, the board of directors wanted to timely and privately resolve the matter with the director. 

Work undertaken

The BTG Advisory forensic services team provided our Private Independent Expert Review (PIER) services to assist the parties with resolving the matter before it became a legal dispute. 

Our expert was appointed by their board to provide neutral support in the matter. A process for the conduct by the expert of an independent preliminary review was agreed upon and, based thereon, the expert would produce their determination in the form of a report with explanation. The report would represent the expert’s preliminary non-binding opinion on the issue and would be shared by the board with the subject director. It was agreed that all communications with the expert would be disclosable.  

The process provided for an initial limited scope report by reference to an agreed fee budget and a subsequent non-binding reporting stage(s) to be designed to allow the parties to make respective submissions to the expert and address those of the other side. 

Outcome

Having obtained information and considered the complex circumstances, our expert established a methodology for the review and delivered their preliminary non-binding determination. Shortly thereafter, the parties were able to make arrangements providing for an early resolution of the matter and avoiding the business disruptive, time-consuming and costly consequences of a legal dispute.