The new company – which still includes the agencies CMW, Twentysix and The Gate – claimed it was ‘business as usual’ when it secured the buyout. But Bob Morton, whose company Hawk Investment Holdings held a 7% stake in the failed business, has accused of the board of breaching its fiduciary duties to its shareholders.
The deal has also been called into question by former Willott Kingston Smith boss Bob Willott (pictured) – now a director of Fintellect – who has called for a change in the law to block management buyouts which have not received the approval of creditors or shareholders.
Willott said: “At Media Square, despite their best efforts the incumbent management had failed to restore the company’s fortunes, so why should they have been rewarded with a second chance?
“And who determines whether the price paid for the buyout is the best available, or whether the management should be allowed to buy at a price that may be less than it would have been if the business, or its component parts, had been sold sooner?”
He added: “At Media Square, the initial indications are that the bank and the shareholders have lost serious sums of money, but that the ordinary creditors have been paid or will be paid in the ordinary course of business. Even assuming that proves to be the case, is it reasonable for the bank and the administrators to have done a deal with the former management behind the scenes without first seeking the approval of either creditors or shareholders of the failed business?”
Willott believes a five-year ban should be imposed on any former director of an insolvent company from returning as a director or shareholder of any company that acquires all or part of that business.
MBO team buys ‘broke’ Media Sq
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