Commercial litigation is the legal resolution of conflicts or disputes which arise in the commercial and corporate sectors.
Some of these disputes include; defective products, business interruption claims, contractual disputes, warranty claims, completion accounts, business licensing, employment problems and many others.
All of these involve calculating the loss of profits arising as a result of a particular event or circumstance from which the claimant company has suffered a loss of profits and claims damages therefrom.
We have experience of these claims from both the claimant and defendant’s perspective.
An example of our work, on instruction from the claimant company, related to an action brought on its behalf by an insolvency practitioner following the failure of the company allegedly as a result of a defective printing press upon which it had taken on substantial borrowings to increase its printing capacity.
A similar example, where we were instructed on behalf of the defendant company, related to the supply of defective ink. The defendant company had been unsuccessful in the original action regarding the suitability of its ink and our work was in connection with the succeeding trial regarding quantum.
We have significant experience of business interruption claims where the loss of profit is suffered as a result of catastrophic events such as fire and flood together with more minor interruptions following roadworks, failure of power supply, etc, etc.
Finally within this category are contractual disputes typically where one party has breached the terms of a contract and the loss of profits flowing from that breach needs to be quantified.
We have diverse experience ranging from the cancellation of a dog warden’s contract by the local Borough Council through to the cancellation of a national vehicle recovery contract placed by one of the large insurers.
We also have experience in calculating compensation arising from the cancellation of sales agency agreements.
Following the purchase or sale of a limited company, completion accounts are usually required to be prepared to the date of legal completion.
The completion accounts process is to protect both purchaser and vendor in the transaction. The agreed sales price for a company is typically subject to a certain level of net asset backing and working capital levels. Depending on the actual net asset backing and working capital available at completion, the price can then be adjusted accordingly.
The purchaser is protected if, at the date of legal completion, the business does not have sufficient working capital to be able to continue to generate the profit stream paid for by the purchaser within the sales price. The purchaser would make good the shortfall and reclaim these monies through the completion accounts process. It also protects the purchaser in the event of the vendor company suffering trading losses or the vendor withdrawing assets through a pre-sale dividend strip immediately before the sale.
From the vendor’s perspective, the completion accounts process usually enables them to receive additional sales consideration for the trading profits made by the company beyond the point at which heads of terms were agreed, and the offer price was based, through to legal completion.
It is usual for the sale and purchase agreement to reflect specific accounting policies to be adopted in the preparation of the completion accounts. These are usually consistent with the purchaser’s usual and historic accounting policies but with the overriding requirement that they should be in accordance with UK GAAP. (Generally Accepted Accounting Practice).
Our Corporate Finance experience of advising on actual transactions for the purchase and sale of companies enables us to advise authoritatively on the issues involved and assist with negotiating to reach a settlement.
Usually, a sale and purchase agreement will provide an agreed timetable for the preparation and agreement of completion accounts. Thereafter there will often be provision to have the completion accounts, or arguments upon them, determined by an independent expert and we are very familiar with this type of work. The ICAEW President’s Appointment Scheme appoints experts to resolve disputes where the parties refer to the President of The Institute of Chartered Accountants in England and Wales.
Our usual approach is to invite written submissions from the purchaser and vendor together with supporting evidence in respect of the claims they make. Thereafter a second submission based upon their response to each other’s original submissions.
We will also interview both purchaser and vendor, obtain any other documentation we require, and thereafter provide our expert determination.
Alternatively, we can provide expert evidence on the direct instruction of either purchaser or vendor should this be moving through litigation or a court process.
A warranty claim is made when the purchaser of a limited company has relied on warranties provided by the vendors which turn out to be untrue or otherwise have been breached.
As a result, the purchaser believes he has suffered financial loss typically expressed as the difference between the actual purchase price and the purchase price that would have been paid in the event of the breach of the warranty being known at the time of the acquisition.
We have experience in preparing evidence that will either justify or refute the warranty claim being made. Thereafter, if there has been a breach of warranty, we can advise on the likely effect on the purchase price. This involves a review of the price negotiations that previously took place and our knowledge of business valuation and the experience gained from the actual sales in which we have been involved.
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