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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3519
Experience:  Solicitors 2 years plus PQE
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I am an Artist who is putting together a project which involves

Resolved Question:

I am an Artist who is putting together a project which involves making photographic portraits of 40 celebrities, creating a documentary and a book with these images assetts.
I had an initial investor and we have recently decided to part company. His investment is a 50% share in my company. We had no initial investment contract when we started, he is now asking for a Personal Guarantee from you and a Debenture to be in place from the Company in order to provide him with comfort and security.
and a Legal Charge on Intellectual property to be discussed and agreed.
Am I within my rights not to agree to a Personal Guarantee.
secondly the copyright of the content is owned by me personally, so the Intellectual property is not up for grabs and therefore not up for discussion.
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. How did he invest his money? Did he lend it to the company or buy shares?
Customer: replied 1 year ago.

He created a company of which his investment company has a 50% share and I own the other 50% of which I am the managing Director.

Customer: replied 1 year ago.

He created a company in which is investment company took 50% share and I have a 50% our original agreement was for a total sum of 150,000 which in reality has only become 60,000

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. So presumably he is selling you his shares back? You cannot pay for them immediately, so he wants a personal guarantee and debenture over the company until he is repaid? Is that correct?
Customer: replied 1 year ago.

he wants a Share sale agreement to be in place with the shares being retained for the time being with the transfer of the shares being completed when all monies due under the Personal Guarantee / Debenture have been repaid.

He is also asking for to consider pre-emption rights in relation to both of us so that neither can sell shares without offering them back to the other first – I think this is a practical solution and aLegal Charge on Intellectual property to be discussed and agreed

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. If the shares are being transferred to you personally then you do not need to give a personal guarantee as the obligation will be on you to repay the money. If the shares are being transferred to the company and the company has the obligation to repay the money then you could (if you wanted) give a personal guarantee). The debenture and charges over the IP is fine (again if you are happy to give this), I would just bare in mind that you need to have alot of flexibility, for example you do not want him enforcing his security if you miss one payment for example. What is the proposed payment term? Kind regards AJ
Customer: replied 1 year ago.

I have asked for the repayment to be made once the project is launched and is in profit after it pays any debts. I have asked for flexibility as you have pointed out.

However I think all of this is a smoke screen. It is my belief that he is trying to engineer a rights grab.

He keeps saying that he own 50% of the rights of the project. I keep asserting that as an artist creating an art project that the rights to my pictures in still or moving form remain with me solely and have never been offered as part of any agreement of funding.

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
Technically if the money was paid to the company, he owns 50% of the company.
It may be a smoke screen, but ultimately you want to get the project back. You need to ensure that if you do give him this security he wont be able to force the company into administration or accelerate the payments.
The safest thing would be to just give him a debenture only as this is only security over the company's assets. You could propose that the company buys back the shares it you are intending to make the purchase form profits, and then you do not need to offer any personal liability as security?
Kind regards
AJ
Customer: replied 1 year ago.

totally understand that he owns 50% of the company and my intention is to buy back his shares.

Couple of things. 1. the original agreement was for 50% share based on an investment of 150k his actual investment is less than 50K and he has not made any investment into the company since December of last year.

But where were are beginning to have conflict is in his assumption that he has paid for and own the intellectual property of the content that I am making.

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
In order to have that assumption he has to have some paper work to support it, it cannot just the terms of your agreement to suit his needs.
As he has not paid for all the shares, would it be possible for some of them to transfer back immediately with the rest to follow when payment is made?
Kind regards
AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3519
Experience: Solicitors 2 years plus PQE
Alex J. and 7 other Law Specialists are ready to help you
Customer: replied 1 year ago.

Thats a very good point. about the shares.

Do I have the right to hold him in breach of contract ?

Back in February the production company I was working with had a problem with a supplier this caused an overspend in our budget . In the resulting meeting they asked us to cover the costs. I refused. Unknown to me, my investor had met with the production company and offered to pay the amount. 3 weeks ago I found out when I approached the production company for my content, because of a deal that I have struck with a broadcaster that they were holding the content to ransom as the investor had not answered any of their attempts to contact him for payment. He is now holding me to ransom over the terms of this contract in order t pay this supplier and release the content.

Is he in breach of contract for non payment of these invoices ?

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