The High Court has ruled that a 2022 corporate restructuring triggered an obligation for Edmond P Harty & Company Unlimited Company to pay Edmond Harty the €10 million remaining under a settlement agreement. The court also rejected the company’s argument that alleged breaches by Mr Harty entitled it to withhold payment.
In a judgment delivered on 21 September 2023, Mr Justice Kennedy decided the issues on a summary judgment application. He found that the transfers of shares and business assets to Bovis, a newly incorporated Isle of Man company, were sales within the meaning of clause 3.6 of the settlement agreement. That clause made outstanding payments immediately due if a majority of the company’s shares, business or assets were sold.
The company had argued that the restructuring was an internal reorganisation to preserve the group’s non-filing structure, with no change in ultimate ownership or control, and so was not a sale under the clause. The judge said the agreement did not limit “sale” to an arm’s-length transaction with an outside buyer. Contemporaneous transaction documents described the transfers as sales. The company had sold its shares in DMG Central to Bovis for €39.25 million; the court found those shares represented almost all of the company’s business and assets. The Founder and the Chief Executive had also transferred more than 99% of the company’s voting shares to Bovis.
The judgment noted that the restructuring weakened Mr Harty’s position as an unsecured creditor, including by moving the company’s assets and affecting dividend protections. The court accepted that the restructuring was undertaken in good faith for legitimate commercial purposes and found no evidence of an intention to prejudice him. Those motives did not alter the clause’s effect.
The company also alleged that Mr Harty had breached settlement terms restricting interference with the business and use of company data. Those allegations were disputed and had not been adjudicated. The judge held they did not provide a defence to payment for shares already redeemed. The agreement preserved separate remedies, including damages or injunctive relief, for any breach established.
The court concluded that the final €10 million had become payable from 31 October 2022, together with interest. It did not enter judgment at that hearing. Instead, it gave the parties a short period to agree arrangements for payment and said Mr Harty could seek judgment under clause 3.7 if they had not done so by the matter’s return to court. Costs also remained to be determined.