Superdry founder sells business assets to fund divorce
You may have seen in the recent press that Julian Dunkerton, founder of SuperGroup, which includes the well-known Superdry brand, is selling a 4.9% stake in the business, worth £53m. This is to pay the monies owed to his wife in their divorce settlement and is his first share sale since the fashion retailer listed on the stock market six years ago. He will still remain the largest shareholder in the group as he will retain 27.2%.
Business interests have to be taken into account when it comes to resolving the financial claims of a divorcing couple. The financial statement known as the Form E, which is usually completed by the husband and wife to obtain financial information, has a section requiring details of the value of any business interests. These interests can be in the form of shares, equipment, premises, goodwill and so on. Sometimes it is necessary to involve a forensic accountant to go through the accounts which are disclosed and raise questions thereafter. Valuation issues can focus not only on what someone's business interest may be worth, but also comment on issues of liquidity, i.e. how easy it would be to raise cash from a business, and tax issues.
The court has ruled that it is not appropriate to engage in double accounting. Consequently, if the nature of the business is really just as an income source, it is not appropriate to take into account both the value of the business, as well as the spouse's income from it. If you have a business like SuperGroup fashion, though, it obviously has a capital and income side to it, as the chain will own shops, stock, goodwill etc.
Sometimes it is necessary, as with Julian Dunkerton, for business interests to be sold to raise the monies necessary to satisfy the matrimonial claims the husband and wife have against each other on their divorce. When arriving at a fair settlement, the court will take into account the more risky nature of business assets, which usually can go up and down in value, versus the more certain assets like bricks and mortar.
This is an area which requires specialist legal and financial advice. For more information please contact me or one of my colleagues in the family team.