Paros Plc v Worldlink Group Plc [2012] EWHC 394 (Comm) (01 March 2012)

Paros Plc v Worldlink Group Plc [2012] EWHC 394 (Comm) (01 March 2012)

Clause 5.1 of the Heads of Terms, insofar as it provides for a break fee capped at £150,000, is enforceable only to the extent it does not constitute unlawful financial assistance under s.151 Companies Act 1985. As Worldlink never re-registered as a private company and the acquisition route was varied, the cap remains applicable. ParOS is entitled to the break fee as of right, not limited to proven costs. The break fee provision is void and unenforceable to the extent it constitutes unlawful financial assistance for a share acquisition, but enforceable for an asset acquisition. Worldlink's liability is capped at £150,000. Worldlink cannot invoke clause 5.2 as a defence. Damages for breach...

Citation
[2012] EWHC 394 (Comm)
Parties
Claimant: ParOS PLC; Defendant: Worldlink Group PLC
Jurisdiction
England and Wales
Judgment Date
01 March 2012
Procedural Posture
Commercial Court Claim / Final Judgment
Outcome
Claim partly allowed; Worldlink liable to pay ParOS the capped break fee of £150,000. Other claims dismissed.
Legal Topics
Financial Assistance Prohibition, Break Fee Enforceability, Contractual Interpretation, Estoppel, Exclusivity Clauses, Negligent Misstatement
Contract Law Company Law Commercial Law Financial Assistance Prohibition Break Fee Enforceability Contractual Interpretation Estoppel Exclusivity Clauses +1 more

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Parties

ParOS PLC

Claimant

Worldlink Group PLC

Defendant

Procedural Posture

Commercial Court Claim / Final Judgment

Legal Issues

  1. 1 Whether clause 5.1 of the Heads of Terms is enforceable or void due to statutory prohibition on financial assistance
  2. 2 Whether Worldlink's liability for ParOS' costs is capped at £150,000 or uncapped
  3. 3 Whether ParOS is entitled to the break fee as of right or only for proven costs

Ratio Decidendi

Clause 5.1 of the Heads of Terms, insofar as it provides for a break fee capped at £150,000, is enforceable only to the extent it does not constitute unlawful financial assistance under s.151 Companies Act 1985. As Worldlink never re-registered as a private company and the acquisition route was varied, the cap remains applicable. ParOS is entitled to the break fee as of right, not limited to proven costs. The break fee provision is void and unenforceable to the extent it constitutes unlawful financial assistance for a share acquisition, but enforceable for an asset acquisition. Worldlink's liability is capped at £150,000. Worldlink cannot invoke clause 5.2 as a defence. Damages for breach...

Court Disposition

Claim partly allowed; Worldlink liable to pay ParOS the capped break fee of £150,000. Other claims dismissed.

Orders

  • Worldlink to pay ParOS £150,000 break fee.
  • All other claims for uncapped costs, damages for breach of exclusivity, and negligent misstatement dismissed.