The Commercial Court has dismissed a claim arising from the management buy-out of two family businesses; a demolition business known as DSM and the property developer, the St Francis Group. The claim was brought by a principal of the family, claiming that the two executives who had led the MBO had conspired to acquire the businesses from the family at a £100m discount to their true value. As well as alleging that he had been the subject of numerous fraudulent misrepresentations and that key information had been hidden from him, the claimant also alleged that the executives owed him fiduciary duties which had arisen due to their close relationships spanning over a decade. After a three week trial, Mrs Justice Cockerill DBE dismissed the claims in their entirety, having determined that no such duties arose and that there was no representations or improper conduct on the part of the executives. In doing so, the Court gave useful guidance on the circumstances in which executives who are part of an MBO process may owe duties to shareholders in respect of such negotiations, and more generally on when fiduciary duties may arise outside the established categories of relationship.
A copy of the judgment can be found here.