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Looking for help and advice if possible in a rather difficult situation.
I am part of a small family run business that was set up as a LTD company slightly over 18 years ago - there are 3 directors / share holders :- A:40% B:40% and C:20%. B & C work at and run the business whilst A is a director by name only - in reality is a silent shareholder with zero involvement.
The business is in a situation where we are at the end of our fixed term with our mortgage lender and they no longer operate within our industry therefore we are being forced to find a new commercial mortgage. We now have an offer from a new lender however Director A is not cooperating meaning the lender can not carry out their due diligence etc preventing us from moving forward with the loan.
Director A has asked the remaining Directors to buy them out using the remortgage to release equity and have the business buy back their shares, however the amount they are looking for for their shares means the remaining directors would also need to add significant capital too.
We are prepared to add funding and have tried to come to an agreement with A to buy their shares but as it stands neither party is willing to accept each others offer. So the remaining party proposes we simply continue as is with the current structure however we can't until Director A cooperates with the new lender and our current lender is getting impatient as this has gone on for a few months already.
In order to help move things forward, B has taken personal legal advice and their solicitor is proposing we vote to remove Director A from the business to motivate their cooperation with the new lender but if this doesn't work then what? We would still need A to cooperate with the lender as they would still be a shareholder. The solicitor has fleetingly mentioned something to do with diluting shares but for some reason the solicitor is not explaining what is involved here merely saying it is complicated and would be best avoided if possible.
Can anyone advise if there is anything else we can do or give some insight into what is involved in diluting the shares?
I am worried that if we can't come to a solution, our lender will force us to sell which I am starting to think is A's plan.
Any advice would be greatly appreciated.
Thanks.
I am part of a small family run business that was set up as a LTD company slightly over 18 years ago - there are 3 directors / share holders :- A:40% B:40% and C:20%. B & C work at and run the business whilst A is a director by name only - in reality is a silent shareholder with zero involvement.
The business is in a situation where we are at the end of our fixed term with our mortgage lender and they no longer operate within our industry therefore we are being forced to find a new commercial mortgage. We now have an offer from a new lender however Director A is not cooperating meaning the lender can not carry out their due diligence etc preventing us from moving forward with the loan.
Director A has asked the remaining Directors to buy them out using the remortgage to release equity and have the business buy back their shares, however the amount they are looking for for their shares means the remaining directors would also need to add significant capital too.
We are prepared to add funding and have tried to come to an agreement with A to buy their shares but as it stands neither party is willing to accept each others offer. So the remaining party proposes we simply continue as is with the current structure however we can't until Director A cooperates with the new lender and our current lender is getting impatient as this has gone on for a few months already.
In order to help move things forward, B has taken personal legal advice and their solicitor is proposing we vote to remove Director A from the business to motivate their cooperation with the new lender but if this doesn't work then what? We would still need A to cooperate with the lender as they would still be a shareholder. The solicitor has fleetingly mentioned something to do with diluting shares but for some reason the solicitor is not explaining what is involved here merely saying it is complicated and would be best avoided if possible.
Can anyone advise if there is anything else we can do or give some insight into what is involved in diluting the shares?
I am worried that if we can't come to a solution, our lender will force us to sell which I am starting to think is A's plan.
Any advice would be greatly appreciated.
Thanks.
