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Construction worker on site

Case Study: Breach of purchase agreement arising from company sale

The Problem

A construction and renovation business was agreed to be sold to one of the company’s suppliers. The sale agreement was documented, comprising of an up-front payment with 70% of the purchase price deferred. The agreement was based around a convoluted and poorly drafted set of consultancy arrangements, that would in theory see payment discharged in line with the performance of the business over the following couple of years.

The purchaser breached the agreement and reneged on the deferred consideration, alleging breach of the consultancy without justification. This was purely an act of unwarranted aggression and greed, and the claim for deferred monies was worth circa £300k.

How Escalate helped

Prior to Escalate’s involvement the client had been unable to progress the claim as they had insufficient funds to do so. Furthermore, the client no longer had control of the company purse-strings so the purchaser held the ‘whip hand’ and was refusing to discuss or negotiate with him.

The Outcome

The introduction of the Escalate team immediately levelled ‘arms’ and whilst court proceedings still had to be issued to force the purchaser to the negotiation table, a successful resolution was achieved via mediation. From initial instruction to resolution, the whole debt plus costs was recovered within 7 months.

Amount Total

£300

Armstrong Watson has been given the rights to use this case study by Escalate, an award-winning, accountancy-led commercial dispute resolution service.