Following a 4-week trial in March 2021, Mrs Justice Joanna Smith DBE has handed down judgment dismissing the claims in TMO Renewables Limited (in liquidation) v Yeo and others [2021] EWHC 2033 (Ch) against four former directors and a former adviser to the Board.

The claim brought by TMO Renewables Limited (in liquidation) (“TMO”) through its liquidators Philip Duffy and Benjamin Wiles of Duff & Phelps Ltd. The claim brought arose out of the circumstances in which TMO went into administration in December 2013. Whilst the Judge made findings of breaches of duty in connection with an EGM in October 2013 in some respects alleged by TMO, she dismissed other heads of liability and found that no loss or damage had been caused.

TMO unsuccessfully argued that, if there had been a change in control of the Board in late 2013, it would have avoided insolvency and developed its business to more than US$50,000,000 in value. The Judge rejected that argument, finding that a change in control would have resulted in TMO being “stripped” of its assets through a pre-pack administration. Her Ladyship commented that:

“In the counterfactual and even assuming the receipt of fresh equity in the amounts raised by Rebio, TMO would now have creditors totalling over £12 million and would be losing £1 million per year. I agree with Mr Morgan that, with the benefit of hindsight, this neatly illustrates that, on balance, TMO could not have avoided going into administration, whether in or about December 2013, or in late 2014 as a consequence of the collapse in the price of oil.”

Having dismissed the claim on grounds of causation, Her Ladyship also accepted the Defendants’ submission that TMO had failed to place sufficient evidence before the Court on which the Court could evaluate any loss. Having observed that TMO’s expert valuation evidence was “less than impressive” and that she did not “have any basis on the available evidence for plucking a figure out of thin air”, she concluded:

“Whilst valuation cases may often require a relatively broad brush approach, particularly where they involve a hypothetical exercise, I do not consider that I have any basis on the available evidence for plucking a figure out of thin air or for “evaluating the chances”. To my mind such an approach would go far beyond mere tolerance of imprecision and would (on the state of the evidence) extend into the realms of remote speculation."

The claim was dismissed. A consequentials hearing is due to take place in September 2021.

Matthew Collings QC and Ted Loveday acted for the Third and Fifth Defendants, instructed by Sarah Rees and Conor Daly of Blake Morgan LLP.

Richard Morgan QC acted for the Fourth Defendant, instructed by Bree Taylor of Alius Law.

The Defendants jointly instructed Doug Hall of Smith & Williamson as their valuation expert.

The full judgment is available here: https://www.bailii.org/ew/cases/EWHC/Ch/2021/2033.html