CR-2024-006692 - [2025] EWHC 2120 (Ch)

The thrust of the Second Applicant’s letter dated 1 November 2024 was to raise concerns regarding the Turnover Statement on the grounds of headcount costs, uncollected debts and high client churn. This was also addressed in detail in Mr Swarup’s first statement but hardly featured in the Applicants’ submissions at the hearing before me.

I have already found that the Statement constitutes the Turnover Statement for the purposes of paragraph 4 of Schedule 5 of the APA. The effect of that is that it was not open to the Applicants to seek to challenge those figures later, as they are now seeking to do. Nevertheless, I will go on to make some further observations.

In relation to headcount, the Applicants say that headcount costs in the posttransaction business are so high that it “undermines the financial assumptions that underpin the Year 1 payment”. However, they do not identify any provision within the APA which would enable them now to challenge the Turnover Statement on those grounds.

As for uncollected debts, the Applicants say that “the APA implicitly assumes timely collection of invoices; however, a significant proportion of debtors are now over 90 days overdue, creating a considerable risk of overpayment under the current earnout structure.” This appears at best to be asserting that a term should be implied into the APA, however no argument for implying such a term was advanced at the hearing before me. In any event, the Applicants do not identify any provision within the APA which would enable them now to challenge the Turnover Statement on this ground.

As regards high client churn, the Applicants say that there has been “poor client retention, with a substantial number of clients entering liquidation or administration.” Again, the Applicants do not identify any provision within the APA which would enable them now to challenge the Turnover Statement on those grounds.

The “concerns” as regards the Turnover Statement have the air of a makeweight allegation, and I do not find that they give rise to a genuine dispute on substantial grounds for the purposes of the application.