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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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I would like the following question to a BARRISTER please. This

Customer Question

I would like the following question to a BARRISTER please.
This is a question by vendors of shares in a private Ltd co. relating to BREACH OF CONTRACT by the purchaser.
The four vendors owned and still own, 100% of the shares in X.. Ltd, a small manufacturing company. The company owned, and owns, its freehold factory.
Mr A and Mr B were enthusiastic to acquire 75% shares in X.. Ltd and 75% in its freehold. To effect that acquisition a contract was entered into in April 2008, just before the new tax year.
Main details of the contract were that the price for the 75% shareholding was £1,600,000 and that the vendors would on completion pay off the balance of mortgage on the freehold and the vendors would discharge the X... Ltd's liabilities but entitled to collect debts due to it.
The contract provided a somewhat complicated mechanism for the transaction. All the shares in X.. Ltd were to be transferred to Y.. Ltd (a company set up by Messrs A & B in early 2008). The freehold property was also to be transferred to Y.. Ltd. The vendors were to receive all the shares in Y... Ltd and then transfer 75% of them to Z..Ltd, whose only shareholders were Messrs A & B.
Completion of the contract was fixed for 31 July 2008 but property crash supervened and the purchaser did not complete on that date nor shortly afterwards when a Notice to Complete expired.
After years of being messed around by Messrs A & B, the vendors at last got to and agreed arbitration hearing in July 2014 before arbiters' tribunal to which the parties agreed. In December 2014 the Tribunal made an award to the effect that the contract should be completed. This meant that instead of Messrs A & B paying damages and getting nothing in return, they would have to pay the full contract price but they would get their 75% acquisition in return.
Messrs A & B have continued to wriggle and prevaricate and have not yet complied with the award. Their latest tactic is to disclose yesterday that Y... Ltd was dissolved just over six years earlier on 2 June 2009 and therefore it is impossible to complete the contract of which the arbiters' award orders completion.
Bearing in mind that Y.. Ltd was merely an immediate vehicle for achieving the desired transfer of the shareholding of X...Ltd, would the dissolution of Y... Ltd prevent the completion of the contract and prevent the High Court from enforcing the arbiters' award.
Messrs A & B have delayed disclosing the dissolution of Y.. Ltd until just after 6 years from the date of dissolution. It also appears that on 20 May 2015 they incorporated a new company, giving it the same name as Y... Ltd so as to hinder or prevent the reinstatement of the original Y... Ltd. Are these facts also relevant, and if so, how?
Mr Ever Alan
Submitted: 1 year ago.
Category: Law
Expert:  Jo C. replied 1 year ago.
Hi.
Thank you for your question. My name is ***** ***** I will try to help with this.
As far as I know I am the only barrister on this site and this is not my area.
We do have solicitors who could look at it and their opinion is just as good. The only difference between the two wings of the profession is that barristers deal with advocacy whereas solicitors deal with litigation.
Expert:  Alex J. replied 1 year ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. I am a company law solicitor and my colleague has asked me to look at this for you. Why was Y dissolved? Did it go insolvent? Who was the named party in the original share purchase agreement? Kind regards AJ

Customer: replied 1 year ago.

Y... Ltd was incorporated in February 2008 and in March 2008 the address of its reg. office was changed to the same address as Z... Ltd. Accordingly, Y...Ltd was incorporated and/or acquired by Messrs A & B, not the vendors. The vendors assume that, since the purchaser failed to complete the purchase of the 75% interest, Messrs A & B had no use for Y... Ltd and did not bother to file any documentation at Company House relating to it. The only documentation filed on behalf of Y...Ltd (apart from that relating to its original documentation in February 2008) were three notices all filed about 28 March 2008, namely termination or resignation of its original director and secretary and change of its registered office, and, in the normal way in such cases, Company House went through the normal routine of threatening and implementing dissolution.

The Share Sale Agreement was expressed to be made between Z... Ltd (which was the purchaser) and four men who owned (and still own) the shares in X...Ltd (who were the vendors).

In the view of the vendors, it was Messrs A & B and their advisers who introduced the role of Y...Ltd into the contractual documentation and who ought to have taken all steps necessary to ensure that on or before completion the vendors could transfer the X...Ltd shares to Y...Ltd and receive Y...Ltd shares so as to transfer 75% of them into ***** that basis, if Messrs A & B failed to implement the correct procedures for acquiring the original share/s in Y...Ltd and becoming directors of it, would Messrs A & B have personal liability on the sale contract and for the failure to complete on the grounds that they were misrepresenting the existence or status of Y...Ltd and their control of it. Being in London, UK, our questions relate to English Law.

PLEASE LET ME KNOW IF YOU REQUIRE FURTHER CLARIFICATIONS.

Expert:  Alex J. replied 1 year ago.
Thank you.
I have just received this. I will review it and revert to you as soon as possible.
Kind regards
AJ
Customer: replied 1 year ago.

WHEN WILL I GET THE ANSWER TO MY QUESTIONS?

Customer: replied 1 year ago.

DO YOU NEED MORE INFORMATION?

PLEASE LET ME KNOW WHEN I WILL GET AN ANSWER?

Customer: replied 1 year ago.
Relist: Other.
WE ASKED THE QUESTIONS ON THURSDAY 4 JUNE BUT WE HAVE NOT RECEIVED ANY COMMENTS OR ANY IDEA WHEN WE WILL RECEIVE THE ANSWERS. FROM THE OUTSET WE SAID THAT IT IS URGENT. IS IT PERHAPS TOO COMPLEX FOR ALEX J? THAT IS WHY I THOUGHT IT SHOULD BE ANSWERED BY A BARRISTER RATHER THAN A SOLICITOR.
Expert:  UKSolicitorJA replied 1 year ago.
Hello,
I am an English Solicitor and have just seen this question.
there is no reason why the transaction cannot be completed with the newly incorporated Y Limited in lieu of the previous Y Limited (now dissolved) as the new Y Limited is essentially a Phoenix company. However, if A and B were not parties of the Share Sale Agreement, they are not liable under it as a contract cannot impose obligations on someone not party to it although it may confer rights on non parties to it under the Contracts (Rights of Third Parties) Act. The main defendant would be z Limited. y limited should have been made a party to the contract as well but I do not know why it was not so included.
I would seek enforcement of the arbitral award in court.
May I help further?

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