Negligence and wrongful loan: The insured person was a director of two companies, owned by overseas investors.
The companies sued him, alleging that the loan was ultra-vires and he had caused a
project to fail. One allegation was dismissed and struck out and the other was settled
just before the trial.
Over £600,000 defence costs were incurred.
Franchise failure: The insured company entered into franchise agreements to sell their products. A
small number of franchises performed poorly and risked potential damage to the
brand and reputation. Following legal advice, termination letters were issued to three
franchise holders for breach of contract. Two of the franchisees made allegations of
fraudulent misrepresentation against the company and against a director. The basis of
the allegations were that the individuals to whom the franchise agreements had been
granted were misinformed as to the potential for business growth and development.
Defence costs exceeded £100,000.
Membership dispute: The dispute centred on the club’s apparent attempts to alter the terms of membership
agreement. Club members alleged the defendants conducted the club’s affairs in a
manner unfairly prejudicial to their interests in breach of the Companies Act 2006.
Defence costs exceeded £73,000 and the settlement amount was over £22,000.
Insolvency action: The insured company provided outdoor staging services. They entered into
administration following non-payment of fees on a large overseas contract.
Proceedings were issued against the former directors alleging that each of the four
directors breached their duty owed to the company pursuant to Section 174 of the
Companies Act 2006. In addition, it was maintained that directors had failed to
take sufficient steps to ensure or secure prompt payment from their customer, or
alternatively, failed to put in place the necessary insurance to protect them from the
risk of default.
Defence costs and damaged exceeded £1.2m.
Share dispute: The claimants were employees who alleged that they were each promised a 10%
shareholding in the business when they were made directors. The managing
director who was alleged to have made the promise maintained that the discussions
were informal and nothing had been confirmed in writing. The claimants sought
performance of the agreement and damages for breach of contract, plus interest.
Defence costs were in excess of £170,000.
Unfair prejudice: Shareholders filed a petition against a director alleging breaches under the
Companies Act 2006 for unfair prejudicial conduct and breach of duties as a director.
Allegations were made regarding the insured company and litigation with other
companies, when a settlement offer could have been accepted, awarding of bonus
payments without full board support and purchasing of land without knowledge of
Case length 3 years, defence costs and damages exceeded £650,000.