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Ask an expert: Negligible value claim on shares

Martin Mann answers a reader's question about a pub-owner company

Question

My client has invested in a company  that operates a gastro pub. He initially acquired shares from a family member for £5 000 and subsequently invested £100 000 in 2006 for new shares. After a promising start the business has suffered financially and despite a number of re-launches funded by shareholder loans the tough economic conditions and stiff local competition have resulted in the business making substantial losses for the past six years. The company holds no significant assets and is insolvent and is tied into a ten-year lease with the brewery personally guaranteed by my client which comes to an end in two years’ time. Trading will continue but the pub will no longer sell food until the lease expires at which point the company will be wound up....

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