With eleven shops across the North Island then trading as ‘Top Catch,’ investors Sergey Tolstikov and Igor Ivanov fell out with Tolstikov now suing to recover his $2.2 million invested.
Top Catch sold fishing tackle and bait.
The High Court dismissed claims by Mr Ivanov that his obligation to refund the $2.2 million was conditional on his finding finance. Payment was due now. If there was a finance condition, it would have been written into the former business partners’ termination agreement, Justice Robinson said.
The court was told the two went into business together in July 2019, falling out some eighteen months later with disagreements over liquidity; both the amount of cash Mr Ivanov was drawing from the business and the amount of cash each respectively needed to contribute as working capital.
Mr Toltstikov had put in over two million dollars. His equity interest was disguised. Mr Ivanov held a 72 per cent stake on trust for Toltstikov.
Their December 2020 termination agreement required Mr Ivanov to pay $2.22 million within a week; repayment of cash Mr Tolstikov had put into the business. With Mr Ivanov unable to find the cash in such a short time, the two subsequently agreed to payment by instalments with interest running at fifteen per cent on unpaid balances. Evidence was given that interest only was paid over the next five months, then nothing.
Getting nervous about repayment, Mr Tolstikov began demanding access to Topcatch’s financial records.
In the High Court, Mr Ivanov was ordered to pay in full immediately the $2.2 million due. There had never been any agreement that payment by Mr Ivanov was subject to first raising a loan.
Justice Robinson further ruled that the requirement to pay interest on the unpaid balance was not Mr Ivanov’s responsibility; interest payable was a debt of their business, Topcatch Ltd. The rescheduling agreement, while nominally an oral agreement between the two personally, did decide that Topcatch would pay the later imposed interest, Justice Robinson said. Mr Ivanov, as Topcatch director, agreed as agent for Topcatch that Topcatch was liable.
Companies Office filings show Topcatch Ltd went into liquidation in 2023. Liquidators sold all the business assets. There is nothing left in the kitty to pay unsecured creditors.
Tolstikov v. Ivanov – High Court (28.03.24)
24.077