Counsel Advises on Challenging a Tomlin Order and Settlement Agreement

Civil & Commercial Litigation

Pre-Action Advice

Samuel Okoronkwo

Facts

A purchaser acquired control of a company under a court‑endorsed settlement requiring payment and transfer of the trading vehicle. After the settlement the purchaser discovered apparent material defects: allegedly false accounts filed shortly before agreement, unresolved tax/VAT issues and a claim the investors hold substantial debentures encumbering the company’s assets and IP. These developments impede fundraising and commercial use of the assets and have prompted enforcement steps.

Issues

Counsel had to test whether there are legally tenable grounds to set aside the Tomlin order or settlement, evaluate misrepresentation, fraud or duress claims, and assess the purchaser’s reliance and prior knowledge. Counsel also had to advise on immediate commercial risks: enforcement, personal exposure to judgment, protection of the revived business and IP, and tactical choices between negotiation, litigation or insolvency routes.

Advice and Solution

Counsel explained that overturning a settlement requires strong grounds: fraud, misrepresentation, duress or procedural vitiation. The purchaser’s partial knowledge of some encumbrances and the short timetable weaken a challenge based solely on non‑disclosure, but deliberate false accounting or deliberate concealment of material liabilities could support misrepresentation or fraud if reliance and causation are shown. Counsel recommended immediate document preservation and a focused evidence review (settlement papers, Tomlin schedule, company filings, debenture instruments and correspondence). A dual track was advised: urgent settlement discussions to limit enforcement risk while preparing narrow, evidence‑led legal challenges if probative misrepresentations surface.

Counsel distilled the matter into a clear legal risk profile and proposed proportionate steps to protect the business and limit personal exposure. Immediate actions include reviewing key documentation, preserving records, initiating settlement discussions to address the debenture, and preparing targeted disclosure and potential claims, alongside insolvency advice.