‘Bad leaver’ provisions not a penalty, rules High Court

In Richards v IP Solutions Group Ltd the High Court considered whether bad leaver provisions in a suite of private equity documents amounted to a penalty under the new test set out last year in Makdessi v Cavendish Square Holdings [2015] UKSC 67.

The case involved two directors who were also both shareholders in IP Solutions Group Limited. The directors were summarily dismissed on the grounds that (amongst other things) they had wrongfully received and retained a bonus to which they were not entitled.