Natural Duvet & Pillow Company Ltd, Re [2011] EWHC 1834 (Ch) (18 July 2011)

Natural Duvet & Pillow Company Ltd, Re [2011] EWHC 1834 (Ch) (18 July 2011)

The fair value of Mr Ng's 50% shareholding is to be determined by reference to maintainable earnings as at 10 March 2005, calculated from the 2003, 2004, and 2005 accounts (with appropriate normalising adjustments and re-allocation of costs to D&P based on turnover ratios), and applying a P/E multiple of 7. The ZLF Debt is not to be treated as requiring interest payments, as the established business relationship provided free credit. The resulting value is £1 million for the company, with Mr Ng's share valued at £500,000.

Citation
[2011] EWHC 1834 (Ch)
Parties
Petitioner: Ivan Ng; First Respondent: Steven Crabtree; Second Respondent: The Natural Duvet & Pillow Company Limited; Third Party: Zhejiang Liuqiao Feather Company Limited
Jurisdiction
England and Wales
Judgment Date
18 July 2011
Procedural Posture
Unfair Prejudice Petition Under Companies Act 2006 S.994 / Judgment After Trial on Valuation of Shares
Outcome
Petition allowed in part; fair value of Mr Ng's 50% shareholding determined at £500,000.
Legal Topics
Unfair Prejudice, Share Valuation, Quasi Partnership, Minority Shareholder Rights
Company Law Unfair Prejudice Share Valuation Quasi Partnership Minority Shareholder Rights

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Parties

Ivan Ng

Petitioner

Steven Crabtree

First Respondent

The Natural Duvet & Pillow Company Limited

Second Respondent

Zhejiang Liuqiao Feather Company Limited

Third Party

Procedural Posture

Unfair Prejudice Petition Under Companies Act 2006 S.994 / Judgment After Trial on Valuation of Shares

Legal Issues

  1. 1 What is the fair value of Mr Ng's 50% shareholding in NDP as at 10 March 2005?
  2. 2 What methodology and adjustments are appropriate for determining maintainable earnings and the applicable P/E multiple?
  3. 3 Should the ZLF Debt and its interest be factored into the valuation?

Ratio Decidendi

The fair value of Mr Ng's 50% shareholding is to be determined by reference to maintainable earnings as at 10 March 2005, calculated from the 2003, 2004, and 2005 accounts (with appropriate normalising adjustments and re-allocation of costs to D&P based on turnover ratios), and applying a P/E multiple of 7. The ZLF Debt is not to be treated as requiring interest payments, as the established business relationship provided free credit. The resulting value is £1 million for the company, with Mr Ng's share valued at £500,000.

Court Disposition

Petition allowed in part; fair value of Mr Ng's 50% shareholding determined at £500,000.

Orders

  • Mr Crabtree to purchase Mr Ng's shares in NDP for £500,000.