Most creditors would, I suspect, be unaware of issues insolvency practitioners sometimes must deal with such as dissenting shareholders. Often the rift between erstwhile colleagues can turn as bitter as any acrimonious divorce. Intransigent positions are taken as the opposing shareholders won’t settle for less than they feel that they are entitled to. It seemingly doesn’t matter how much money is spent on lawyers, accountants, or other professionals as they harden their hearts because they perceive that they have been wronged.
This often results in Court action under s174 Companies Act frequently leading to either liquidation or receivership. These insolvency appointments are often not of insolvent companies as the two “last men” left standing are the two shareholders or two factions of shareholders. Even when a settlement is reached between the parties prior to a liquidation (a solvent liquidation being part of the settlement) it seems that matters do not always end there. One of my colleagues in the industry found this out to their inconvenience and annoyance and had to resort to the Appeal Court to validate their actions as liquidator.
The money that is wasted because of people taking such polarising standpoints is mind boggling, when a simple settlement brokered by a professional (or by themselves), could have eased the way and saved a fortune. Of course, this depends on rational minds at the table which is often not the case. Perhaps I am just a simple soul, but I would like to think that if I were one of the parties involved, I would just bend the knee and settle for less than I felt I was entitled to even if that meant that the other party would end up getting more. I would be better off in the end saving the money needlessly spent on professionals. This is, of course, also true of relationship breakups.
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