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FASHION LAW Solving your shareholder dispute in


As the UK economy continues to flatline, offering sales promotions will continue to be necessary for fashion retailers in 2023.


W


hatever the origin of a disagreement – be it lie in Brexit, pandemic, or slowdown of the economy –


shareholders’ disputes are far more common than we think – even within the fashion industry where shareholders’ disputes are often kept private.


For example, the last few years has seen the shareholders’ dispute involving Ralph & Russo. Such a dispute was financial in origin with shareholder Candy Ventures, owned by Nick Candy. The shareholder disputes within Fenwick over the years have also been publicly reported.


It is also the case that it is not only financial considerations that the business is


left contending with, but reputational issues too. Further the differing “hats” worn by the individuals (shareholder/employee/director/ consultant) can be further complicated in family-owned fashion businesses, where there are often long-standing resentments. What is the case is that we have seen a rise in client enquiries about how to resolve shareholder fallouts. These enquiries range from clients at the very start of a dispute, to shareholders who have already agreed outline terms to settle their differences but are now contemplating how these can work legally. Using an illustrative example, we have set out a handy guide to working through your shareholder dispute.


The hypothetical scenario Two 50/50 shareholders in a UK private company in the fashion industry (“FashionCo”) have a spectacular fallout. After months of painful negotiations, Shareholder A has agreed terms to purchase Shareholder B’s entire shareholding in FashionCo. However, Shareholder A doesn’t have their own money and picks up the phone to instruct Fox Williams as follows:


“We have managed to settle our differences” “FashionCo is going to buy back Shareholder B’s shares as I haven’t got any available funds” “FashionCo also doesn’t have sufficient cash flow to purchase them all on day one, so we’ve agreed a three-year payment plan”. “Can you draw up the documentation to make all this happen?”


The hurdles to overcome The short answer to the above question is yes, but the execution is more complex. There is


60 • FOOTWEAR TODAY • FEBRUARY 2024


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