Intense conflict between shareholders in family business settled

An escalating row had arisen in a family business between the three shareholders, grandsons of the founder. Two of the three also held priority shares and were directors.

Not only had discussions become impossible, but things almost came to fisticuffs at times. Doors were slammed, and they messed up each other’s offices.

Our assignment

We were engaged by two of the shareholders. Our assignment was to find a solution within the shortest possible time frame so as to guarantee the continuity of the business.

Our approach

Together with the other shareholder’s lawyer, we set to work on a number of solutions. We outlined the possibilities of a total or partial business transfer and a so-called ‘division following a dispute’, among other things. Together with an accountant we arrived at an overall price.

However, negotiations ground to a halt at a given moment. People were obviously not quite ready for a final deal. Whatever road we took in the discussions came to a dead end.

In consultation with the client we decided to bring things to a head: the ongoing tensions had become exacerbated and the business was in serious danger of going under. There was no time left to find a solution at a leisurely pace.

We filed an application with the Netherlands Enterprise Court at the Amsterdam Court of Appeal to order an investigation into the management of the company. We also requested the Netherlands Enterprise Court at the Amsterdam Court of Appeal to take immediate measures, including the suspension of one of the directors and the suspension of his voting right as a shareholder. Expeditiously as always, the Enterprise Court scheduled a hearing at very short notice.

The result

By increasing the pressure in this way, things suddenly began to gain momentum. Faced with the prospect of an undesirable outcome in the proceedings, including the possible appointment by the Enterprise Court of an external provisional director, the parties quickly got down to business. One part of the business was split off in favour of one of the shareholders; the other two continued the business. A tax consultant was engaged to find the best solution in tax terms.

Years later both companies were still in business and performing very well. Tensions had finally eased and the rest of the family were happy once again to see their kith and kin attending family gatherings.

Would you like to know more about resolving conflicts between shareholders? Contact Pierre van Voorst.