![BL-2021-002293 - [2025] EWHC 678 (Ch)](https://backend.juristeca.com/files/emisores/logo_O3rEzCI.png){kind=logo}
Factual background
Factual background
As will be seen to be relevant below, the claimant partnership was dissolved some years ago. The claim is pursued on its behalf by its former general partner, FCGPL, which was dissolved on 2 November 2010 and restored to the Guernsey register of companies on 4 February 2021. Immediately before FCGPL’s dissolution, it had three directors, Mr Pascal Mahieux, Mr Richard Stapley and Mr Herman Spruit.
As I indicated in my November 2023 judgment, the claimant alleges in the particulars of claim that FCILP was a fund formed for the purpose of making venture capital investments in the technology sector, that its business ceased on 5 April 2010 and that it was dissolved without knowledge of the cause of action pleaded in this claim.
It is common ground that, on 27 March 2002, the claimant, the defendant and others entered into a Subscription and Shareholders’ Agreement (“the SSA”) relating to a company then known as Storageonline Holdings (UK) Ltd, which subsequently changed its name to Comprendium (UK) Ltd (“Comprendium UK”). The claimant claims that it invested substantial sums in the equity of Comprendium UK, was allotted preference shares worth around €7.5m, having acquired over 400,000 ordinary shares, and loaned significant sums in excess of €5m to the company.
It is pleaded that the defendant and Mr Timothy Horlick were introduced to one another in late 2001 as Mr Flohr was searching for investors to aid with the acquisition of software companies, with particular emphasis on the document management and archiving sectors, and that they became close friends and reposed and trust and confidence in one another. It is alleged that Mr Horlick made a personal loan to Mr Flohr of €500,000, which was not repaid.
At the time of entry into the SSA, Comprendium UK acquired the share capital of other companies. Mr Flohr became the Chairman of the company. It is pleaded that its subsidiaries’ principal activity was that of enterprise software and document management. The primary objective of the SSA is said to have been to establish it as the leading provider of enterprise document management and storage solutions in Europe with an exit strategy by the third anniversary. In the event, it is common ground that Comprendium UK’s financial position deteriorated rapidly from the time of the SSA, and it never made a profit, before it was dissolved on 31 July 2007 (having again changed its name to Umbra Ventures Ltd).
The factual basis of the claim as currently pleaded is further explained in the second witness statement made by the claimant’s solicitor, Ms Lucy Vials, in response to the defendant’s application. She explains that Mr Horlick was introduced to Mr Flohr by a colleague of Mr Horlick’s then wife (Mrs Nicola Horlick), and goes on:
‘At the time, Mr Flohr and his business partner, Mr Roman Brunner, were seeking investment into a new venture to establish a group specialising in online document management, storage and archiving solutions for European businesses. The proposal was for the acquisition and unification of three existing companies: Micro-Image Business Solutions Limited (UK) (“MBS”), Solitas Informatik AG (Switzerland) (“Solitas”) and Solsys Solution Systems GmbH (Austria) (“Solsys”).’
A key premise of the claim is that Mr Flohr was to play a central role in the operation of Comprendium UK. The claimant relies on the Business Plan prepared before the entry into the SSA, which referred to the ‘experienced and highly motivated management team’ headed by Mr Flohr and Mr Brunner. Likewise the service agreements, and the correspondence surrounding them, are said to signal the importance of Mr Flohr’s role and personal involvement to the Fund. Ms Vials explains that Mr Flohr assured Mr Horlick that he intended to play a full-time and hands-on role in the business and told Mr Horlick not to worry, as the use of a separate company, Executive Management Limited, to provide Mr Flohr’s services was only for tax purposes. The Service Agreement as signed included non-compete provisions applicable to Mr Flohr.
Ms Vials says that ‘Mr Flohr represented and maintained that he would be intrinsically involved with the running of Comprendium UK, as his expertise was of vital importance.’ Furthermore, ‘Remuneration for the Defendant’s services was to be in excess of €200,000, a significant amount at that time, but reflective of the Fund’s understanding of the essential “hands-on” role that Mr Flohr had represented he would play in Comprendium UK. …’
It is pleaded that Mr Flohr represented in an email dated 7 February 2002 to a prospective investor:
‘My role: As Executive Chairman of StorageOnline, I will be responsible for the profitable growth path as outlined in the business plan. You stated correctly, that one of my strength is also on the sales side with high level corporate decision makers at large enterprises. I am therefore very comfortable to commit, that I will devote a substantial part of my efforts to not only make those executive relationships available to StorageOnline, but also be significantly involved in the sales cycle to ensure, that these relationships turn into accountable revenue.’
The gravamen of the claimant’s complaint in the particulars of claim is summarised at paragraph 3:
‘3. Unbeknown to FCILP, Mr Flohr set up, controlled and kept hidden from FCILP a parallel structure of Comprendium companies in Switzerland and Germany. Those companies acquired European technology companies from Comdisco Global Holding Company Inc (USA), in one instance for a profit of EUR 93m or more at completion. That parallel structure of companies had no right to use the name “Comprendium”, leveraged the existing company structure under Comprendium UK and used its resources and personnel.’
The claimant pleads that Mr Flohr owed a duty to act in good faith as an implied term of the SSA, and that he owed fiduciary duties to the claimant. It is alleged that Mr Flohr breached these duties in a number of ways. As far as what is pleaded as the ‘Parallel Comprendium Company Group’ is concerned, it is alleged that Mr Flohr caused the Comprendium UK company structure to be leveraged to set up Comprendium Investment SA in Switzerland, and that it purchased the share capital of Comdisco (Switzerland) SA (also, “Comdisco Switzerland”) from Comdisco Global Holding Company Inc (USA) (Mr Flohr being a former employee of Comdisco in the USA). It is further alleged that Mr Flohr caused the incorporation in Germany of Comprendium Investment (Deutschland) GmbH, in order to acquire Comdisco Deutschland GmbH, being Comdisco’s German operations (also referred to as “Comdisco Germany”). It is also pleaded that, in 2004, Comprendium Capital SA (Switzerland) was incorporated.
I will refer for ease of reference to these companies as the parallel structure of companies or as the Parallel Comprendium Company Group (as they are defined in the Particulars of Claim). I do so solely for the purposes of referencing the companies separately from Comprendium UK, and in doing so do not intend to express a view on the merits of the claimant’s allegations.
The claimant further pleads that, in breach of the alleged duties of good faith and fiduciary duties:
Comprendium UK was restructured in 2003 to 2004 on Mr Flohr’s initiative, without disclosure of the Parallel Comprendium Company Group, and the parallel structure acquired the rights to European Union and German trade marks for “Comprendium”.
(The claimant believes that) funds were channelled through subsidiaries of Comprendium UK to pay for Comprendium Leasing (Deutschland) GmbH and Comprendium Finance SA.
Mr Flohr caused himself to be removed as a registered director and company secretary of Comprendium UK, whilst continuing as chairman of the board of Comprendium UK.
Mr Flohr exploited the assets and manpower of Comprendium UK and its subsidiaries for his benefit and for the benefit of the Parallel Comprendium Company Group.
Mr Flohr exploited the financial vulnerability of Comprendium UK for the benefit of the Parallel Comprendium Company Group in his dealings with its trade marks.
Ms Vials’ second witness statement summarises at paragraph 72 the factual basis of these allegations of breach of duty in the following way:
‘72.1. During his tenure as Chairman of Comprendium UK, Mr Flohr caused to be incorporated a series of parallel Comprendium companies, including to the Fund’s present knowledge, Comprendium Investment SA, Comprendium Finance SA, Comprendium Capital SA, Comprendium Investment (Deutschland) GmbH, and Comprendium Leasing (Deutschland) GmbH;
In particular, Mr Flohr then utilised some of those companies within his Parallel Comprendium Structure to purchase the Swiss and German subsidiaries of his former employer, Comdisco Holdings Global Inc. In particular:
On 10 October 2002, Mr Flohr caused Comprendium Investment SA to purchase the entire share capital of Comdisco (Switzerland) SA, which changed its name to Comprendium Finance SA;
On 29 April 2003, Mr Flohr caused Comprendium Investment (Deutschland) GmbH, a subsidiary of Comprendium Investment SA to acquire the shares in Comdisco Deutschland GmbH, which, by that point, had already changed its name to Comprendium Leasing (Deutschland) GmbH;
It is the Claimant’s case that by these transactions Mr Flohr made very significant profits for his personal benefit and built up a substantial collateral business empire to the detriment of the Claimant;
Contrary to his ongoing fiduciary duties and duties of good faith, Mr Flohr never told the Claimant (nor Mr Horlick) that he had used and was continuing to use Comprendium Investment SA and other Comprendium branded companies to acquire, run and manage the former assets and businesses of Comdisco Switzerland and Comdisco Germany;
Further, after his acquisition of the former businesses and assets of Comdisco Switzerland and Comdisco Germany, Mr Flohr prompted a process of corporate restructuring at Comprendium UK. During that process, Mr Flohr never referred to, nor mentioned, the Comdisco acquisitions. Nor during that process did Mr Flohr reference the parallel Comprendium companies (Comprendium Leasing (Deutschland) GmbH, Comprendium Investment (Deutschland) GmbH, Comprendium Finance SA and Comprendium Capital SA). This is surprising if, as Mr Flohr suggests, there was no concealment of his acquisitions of Comdisco entities and use of parallel Comprendium-named companies to effect and manage those acquisitions.
Mr Flohr had no right to use the Comprendium name and trademark in his Parallel Comprendium Structure;
Following the acquisitions, Mr Flohr unilaterally resigned from his position as a Director of Comprendium UK. The Claimant and Mr Horlick took this action to be a simple error at the material time. Mr Horlick was only notified by Mr Rinaldo on 27 November 2003 that Mr Flohr appeared to have removed himself from Comprendium UK’s Board of Directors on 21 May 2003, according to the Annual Return filed on 2 June 2003, even though there was no proper notice filed alongside the Annual Return. Until Mr Rinaldo’s email, it is clear that Mr Horlick was unaware that this had occurred, particularly since, upon becoming aware of this fact, Mr Horlick requested that Mr Flohr be reinstated to the Board, stating “Thomas should only have been replaced as Secretary, not as a Director. Carl should be removed and Thomas reinstated.” Of course, with the benefit of hindsight and, in retrospect, it is clear that Mr Flohr’s action was deliberate and undertaken with a view to avoiding his duties to Comprendium UK. However, Mr Flohr did not disclose the reasons for his actions at the time.
…
Further, the assets and manpower of Comprendium UK and its subsidiaries were exploited by Mr Flohr for his benefit or those of the Parallel Comprendium Structure, including by the use of shared offices and staff.
The above actions frustrated the purpose of Comprendium UK, which was to be the ultimate holding company for the whole of the Comprendium group.
Once Comprendium UK was in considerable financial difficulty, Mr Flohr exploited its vulnerability by obtaining its registered trademark for the benefit of the Parallel Comprendium Structure. I address this point further below, but the Claimant’s case is that Mr Flohr made various representations at this time to explain why he required the benefit of the trademarks, including by reference to his own business reputation and personal exposure on guarantees. Mr Flohr never disclosed, nor referred to the fact that he required the trademarks as a result of his acquisition and management of former Comdisco businesses under the Comprendium brand.
. Throughout the life of Comprendium UK, Mr Flohr was obliged to deal fairly and openly with the Fund, disclosing facts or circumstances likely to affect materially the business of Comprendium UK. His continuing failure to do so was an ongoing breach.’
It is also pleaded that, in breach of the same duties, Mr Flohr frustrated the business of Comprendium UK, which he knew to be experiencing serious financial difficulties, by failing to comply with an agreement he reached with Mr Horlick, part of which was that €10-€20m of annual business would be placed with Comprendium UK, and which would have ensured its profitability. I will return to this allegation further below.
The claimant seeks, in summary, the following relief:
An account of profits made in breach of contractual and fiduciary duties, and/or disgorgement damages.
Damages or equitable compensation for Comprendium UK’s inability to repay its loan, redeem its ordinary and/or preference shares and pay interest to the claimant.
The market value which the claimant’s ordinary shares in Comprendium UK would have had if there had been no breach of duty as alleged.
The profit that the claimant would have made on its investment in Comprendium UK in the absence of the alleged breach of duty.
Alternatively, damages or equitable compensation to restore the claimant to the position it would be in had it not made the loans to or investments in Comprendium UK which it did make.