Attempts by financially-pressed Cambridge horse stud Linwood Park to do a deal with creditors fell apart when news leaked that Stuart Brauninger and Michael Tololi had negotiated a special deal for two creditors who threatened liquidation.
Linwood Park Stud Ltd is currently in receivership and liquidation. A total of $1.07 million is claimed by eighteen unsecured creditors. The High Court was told director Stuart Brauninger and associate Michael Tololi worked frantically in mid-2017 to avert Linwood Stud’s immediate liquidation. Pressing creditors were offered a scheme of arrangement: a moratorium on creditors’ claims, while Linwood management sold down company assets in an orderly sale. Two creditors: PJ & SJ Westend Partnership together with Cambridge Veterinary Services were not interested. To leverage a better deal, they threatened to immediately put Linwood into liquidation. A side deal was struck. Each would get immediate payment of $25,000, with Messrs Brauninger and Tololi personally guaranteeing payment of the balance. The contract included a confidentiality clause; Westend and Cambridge Vet were not to tell any other creditors about their side deal. Word got out. Other creditors then refused to join the proposed moratorium. Linwood Stud spiralled into liquidation.
In the High Court, Messrs Brauninger and Tololi argued their personal guarantees were not enforceable; any breach of confidentiality by Westend or Cambridge Vets nullified the deal. Justice Campbell ruled there was insufficient evidence either had breached the confidentiality clause. Silence when challenged about leaking details did not amount to evidence of any breach.
Brauninger & Tololi v. Westend – High Court (24.09.20)
20.156