Former Chesterton Ltd owner Mohammed Jafari-fini has upped the stakes in his High Court battle for control of the troubled agent.
Jafari-fini this week applied to bring a derivative action on behalf of his takeover vehicle, Phoenix Acquisitions Ltd (PAL), against Skillglass Ltd, the Resurge plc subsidiary that financed his £12.9m buyout of Chesterton in April 2003.
The Iranian investor claims that demands alleging “technical breaches” of the loan facility agreement, served on PAL by Skillglass last October and December, were invalid.
He said: “The demands are invalid and all the subsequent actions by Resurge and Skillglass were invalid. I will fight as long as it takes to make sure my rights are restored.”
Last Monday, Judge Rich QC agreed that Jafari-fini had locus standi to bring a derivative action on PAL’s behalf.
At the time that EG went to press, the judge had not ruled on whether Jafari-fini had established a “prima facie case”, the second hurdle for bringing a derivative claim, but stated that he was “satisfied that there is at least an arguable case that the October and December notices were invalid”.
In court last week, James Ayliffe, counsel for Jafari-fini, claimed that PAL could have obtained the necessary funds to pay a loan instalment, due last January, by way of a £3m reverse premium on an assigned lease of Chesterton’s commercial office at Lily Hill House, Lily Hill Road, Bracknell.
He said that, when Skillglass had served notice of default, Chesterton had been “in a very strong position”, holding at its disposal around £4m that “could have provided the funds to carry out the reverse premiums transaction”.
He argued: “PAL was under the control of Skillglass, so it was Skillglass that decided not to carry out the reverse premium transaction.”
However, David Oliver QC, counsel for Skillglass, said that, at the time, PAL had not been in a financial position to take on the “onerous” lease, which still had a 16-year term at a rent of £27.80 psf.
A spokesperson for Skillglass declined to comment on the merits of the claim, saying: “At this stage, the matter is the subject of legal proceedings.”
If Jafari-fini is permitted to bring the derivative action, he will seek the return of PAL’s 86.9% stake in Chesterton, damages for losses caused to Chesterton and PAL during the period that Skillglass was in control, a declaration that PAL’s obligations under the loan agreement have come to an end, and an account of any benefits, including dividends, that Skillglass may have received.
References: EGi Legal News 15/10/04
