ESO Capital Luxembourg Holdings II SARL v GSA Invest Management SA & Ors [2017] EWHC 1351 (Ch) (12 June 2017)

ESO Capital Luxembourg Holdings II SARL v GSA Invest Management SA & Ors [2017] EWHC 1351 (Ch) (12 June 2017)

The court held that as at 10 October 2012, there was insufficient evidence of a real market for condo-hotel redevelopment in Villars, Switzerland. The proper approach was to value the hotel on a discounted cash-flow basis as a continuing hotel business. The claimant's 30% shareholding in Promoroche had a value, but not as high as claimed. The court preferred the more conservative DCF-based valuation, adjusted for certain balance sheet items, resulting in damages reflecting the true value of the lost shareholding.

Citation
[2017] EWHC 1351 (Ch)
Parties
Claimant: ESO Capital Luxembourg Holdings II SARL; First Defendant: GSA Invest Management SA; Second Defendant: Emmanuel Aim; Third Defendant: Alain Schibl; Fourth Defendant: Henry Gabay; Fifth Defendant: Promoroche SA
Jurisdiction
England and Wales
Judgment Date
12 June 2017
Procedural Posture
Commercial Breach of Contract Claim / Judgment After Trial
Outcome
Claim allowed in part
Legal Topics
Damages for Breach of Contract, Shareholder Rights, Valuation of Shares, Hotel and Property Valuation, Settlement Agreements
Contract Law Commercial Law Damages for Breach of Contract Shareholder Rights Valuation of Shares Hotel and Property Valuation Settlement Agreements

Case Brief

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Parties

ESO Capital Luxembourg Holdings II SARL

Claimant

GSA Invest Management SA

First Defendant

Emmanuel Aim

Second Defendant

Alain Schibl

Third Defendant

Henry Gabay

Fourth Defendant

Promoroche SA

Fifth Defendant

Procedural Posture

Commercial Breach of Contract Claim / Judgment After Trial

Legal Issues

  1. 1 Proper method for valuing a 30% shareholding in a Swiss hotel-owning company as at 10 October 2012
  2. 2 Whether the hotel should be valued on a discounted cash-flow basis or a real estate (condo-hotel) basis
  3. 3 Whether there was a market for condo-hotel redevelopment in October 2012

Ratio Decidendi

The court held that as at 10 October 2012, there was insufficient evidence of a real market for condo-hotel redevelopment in Villars, Switzerland. The proper approach was to value the hotel on a discounted cash-flow basis as a continuing hotel business. The claimant's 30% shareholding in Promoroche had a value, but not as high as claimed. The court preferred the more conservative DCF-based valuation, adjusted for certain balance sheet items, resulting in damages reflecting the true value of the lost shareholding.

Court Disposition

Claim allowed in part

Orders

  • Defendants to pay damages to the claimant reflecting the value of the 30% shareholding in Promoroche as at 10 October 2012, calculated on a discounted cash-flow basis.
  • Any further relief or quantum to be determined in accordance with the judgment.