Jurisdiction(s):
United Kingdom

Unfair prejudice (s994 CA 2006) rejected: private equity 'swamping rights' valid on insolvency: Durose v Tagco [2022] EWHC 3000 (Ch), England and Wales

Published on: 22 February 2023

Published by a LexisNexis Dispute Resolution expert

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Article summary

Durose & others v Tagco BV & others [2022] EWHC 3000 (Ch)

Summary of the case

Judge Bird held that the petitioners had entered a commercial arrangement whose terms were tightly controlled by a comprehensive suite of expertly drafted contracts and documents. On the evidence, he concluded the private equity investor had at all times adhered to the agreed terms. In those circumstances, it was fair and just to hold the petitioners to the legal agreements, and they were not entitled to protest that their treatment was unfair. The parties’ relationship was purely commercial, with all material dealings conducted through solicitors. The judge was satisfied that every signatory to the investment agreements had the opportunity to review the documents, contribute to their content and obtain legal advice on them. He found the petitioners knew this was not a risk‑free endeavour and that an insolvency event would trigger enhanced voting rights (swamping rights). He also found that the insolvency resulted from a combination of factors, including:

failure to control the company’s finances after the investment
control...

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