The High Court of Kenya has made a significant ruling in a dispute involving Paradiso Toys Limited, a company co-founded by former lovers Petra Lettau and Yves Berten. The court's decision was made after finding that the collapse of their relationship had irreparably damaged the management of the business. The court declined to liquidate the company, instead opting for an independent valuation and buy-out of their shareholding.
According to court records, Lettau and Berten jointly incorporated Paradiso Toys Limited and served as shareholders and directors. The company's property also housed their shared residence during their relationship. The court noted that the line between their partnership and separate corporate dealings under the company was thin. Lettau owned 33.33 percent of the company and claimed she invested about 500,000 euros from the sale of a property into the development of the company’s hospitality business.
Lettau sought to have Paradiso Toys liquidated under Section 424(1)(g) of the Insolvency Act, arguing that she had been unfairly excluded from the company's affairs after her relationship with Berten ended. She claimed that Berten excluded her from management, removed her from decision-making, cut off her access to funds, and eventually forced her out of the premises where she had lived. Lettau also alleged that she was removed as a director without being served with notice of the meeting and was denied access to company records.
Berten opposed the petition, maintaining that the dispute stemmed from the collapse of the parties’ romantic relationship rather than any oppression in the management of the company. He denied diverting company revenue or concealing company accounts and argued that Lettau had voluntarily disengaged from the business. Berten further maintained that the company remained solvent and operational and that liquidation would unfairly affect employees, clients, and ongoing business obligations.
The court agreed that there had been a complete breakdown of trust between the shareholders but found that liquidation was not the most appropriate remedy. The judge ordered an independent valuation of the company and the parties’ shareholding by a firm of certified public accountants to be agreed upon within 30 days. If they fail to agree, the chief executive officer of the Institute of Certified Public Accountants of Kenya will nominate the valuer.
Once the valuation is completed, Berten will have the first right to buy Lettau’s 33.33 percent stake. If he declines, Lettau will have the option of purchasing Berten’s 66.66 percent shareholding at the value determined by the same valuation. The court's decision aims to provide a fair exit for Lettau and resolve the dispute between the former lovers.
Key points
- The court ordered an independent valuation and buy-out of Paradiso Toys Limited due to the irreparable damage caused to the business by the breakdown of the relationship between its co-founders.
- The company's co-founders, Petra Lettau and Yves Berten, had a 33.33 percent and 66.66 percent stake, respectively.
- The court's decision aims to provide a fair exit for Lettau and resolve the dispute between the former lovers.
