C L I E N T
P R O F I L E
We worked with UK-based lawyers acting on behalf of a UK resident shareholder and creditor of a British Virgin Islands (BVI) registered company. The company, which was managed from Jersey using nominee directors, had invested in a property development project in Dubai that encountered serious difficulties.
A shareholder dispute had led to deadlock in management, halting the company’s ability to trade and complete the development. Compounding this issue, the company suffered a substantial financial loss and although the shareholder suspected the reason for this, no concrete evidence could be found. After being introduced to the shareholder by their legal advisors, Menzies LLP (HLB UK) were asked to provide specialist guidance on the best way to recover as much of the shareholder’s losses as possible.
The issues
Our role was to develop a strategic solution to help the shareholder navigate the recovery situation in the most cost-effective manner and, at the same time, to overcome the various obstacles that would be put in our way. Following in-depth consultations and a thorough investigation into the circumstances surrounding a series of questionable transactions, it transpired that the root cause of the problem was poor legal advice provided by a Dubai based firm of lawyers that operated as a branch of a UK registered firm. This discovery that the Dubai lawyers were a branch of the UK firm presented an opportunity to pursue a claim against the Dubai firm in the UK, avoiding the significant cost and complexity of having to initiate proceedings in Dubai.
The actions
The strategy centred on leveraging the debt component of the shareholder’s investment in the BVI company to present a winding-up petition in the UK High Court. This was supported by the existence of an asset belonging to the Company within the UK jurisdiction, namely, a “chose in action” (a legal claim against a third party).
Following our appointment as liquidators, the matter became increasingly complex due to resistance from other stakeholders and logistical challenges in pursuing cross-border litigation. Exercising our powers as UK liquidators, we were able to gain access to and review the files of the Dubai-based law firm.
Working alongside legal professionals in both the UK and Dubai, and supported by a favourable Counsel’s opinion, we secured after-the-event (ATE) insurance and litigation funding, enabling us to progress the claim with confidence and in the knowledge that we could take the case through the Courts if it became necessary.
The outcome
Despite significant legal and procedural challenges, our team remained committed to using all the tools at our disposal to maximise the recovery using a liquidation. Through skilled negotiation and fostering collaboration among stakeholders, we were able to settle the claim on favourable terms prior to trial. This led to a substantial recovery being made for the company and its creditors, achieving a very positive outcome against unfavourable odds.
In summary
Our involvement unlocked a solution where progress had previously stalled, securing financial restitution for those affected by poor legal advice. By combining our insolvency and litigation expertise with innovative strategies and international reach, we demonstrated the significant value HLB can bring to complex, cross-border matters of this nature.
Explore our Restructuring and insolvency services to find out more on what we offer.