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Businessman ordered to repay more than £5m to former partner

Posted: 24th August 2020   In: Corporate Commercial

A businessman who misappropriated large sums of money from his company has been ordered to refund more than £5 million to his former partner. 

The case involved Ashank Patel and Mohammad Babar Iqbal, who had been partners in a property development business.

After some of the projects suffered delays due to cashflow problems, Patel discovered that Iqbal had been misappropriating funds from the business, resulting in losses of around £5 million.

 The two men then entered into a deed containing clauses directing Iqbal on how to reimburse Patel.

 Iqbal agreed to:

  1. pay the proceeds of the business, and any other funds he was able to raise, to Patel, another partner and himself under a defined schedule, and to hold such proceeds and funds on trust until payment was made
  2. transfer a 25% shareholding in one of his companies to Patel
  3. procure another of his companies to pay £400,000 to Patel
  4. execute a declaration of trust in favour of Patel over his 66% beneficial interest in a second company.

Iqbal failed to comply with any of the clauses, so Patel applied for an order for damages.

The court found in his favour and made a declaration that Patel should receive £5 million to cover his losses. Iqbal was also ordered to pay a further £400,000 in damages and to transfer his 25% share in the first company and his 66% share in the second company to Patel.

Please contact Sing Li if you would like more information about the issues raised in this article or any aspect of company law.

Businessman ordered to repay more than £5m to former partner
[2020] EWHC 1174 (Ch)
ASHANK PATEL v MOHAMMAD BABAR IQBAL (2020)
Ch D (Judge Ashley Greenbank) 18/05/2020
Posted by: Sing Li
Corporate Commercial
Luton Office