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Warring factions

22 July 2008
Issue: 4168 / Categories: Forum & Feedback
Restructuring a company using the Insolvency Act.

Mr A and Mr B own 98% of a trading company and propose a reorganisation partition using the Insolvency Act 1986 because they have fallen out. The two trading divisions are to be split out into two new off-the-shelf companies: Newco 1 which will be set up by Mr A; and Newco 2 which will be set up by Mr B.

Their shares in the original trading company will be redesignated 'A' and 'B' shares with the right to receive on liquidation the respective trading divisions.

A non-family director Mr X owns the remaining 2% of the original company and it has been agreed that he will go with Mr A so that his shares will be redesignated as 'A' shares.

In the future Mr A would ideally like to slightly increase Mr X's stake in Newco 1. Mr...

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