Ramsay's Kitchen Nightmares and how to avoid them in your business

When business partners fall out, what’s your recourse?

Celebrity chef Gordon Ramsay is suing former business partner Danny Lavy for hi-jacking his kitchen range - and the knives are out.

The foul-mouthed star of Hell’s Kitchen and Kitchen Nightmares has started proceedings through the London High Court to prevent Lavy from flogging Gordon Ramsay branded kitchenware in the US. Lavy’s company, Sensio, currently sells Ramsay’s range through grocery giant Kmart, and claims that it holds a binding contract to the rights.

The row centres around a ‘letter of intent’, signed by both parties last year, which Lavy claims is equivalent to a binding agreement on the US distribution deal. The case has already been thrown out of the US courts for being out of their jurisdiction so now Ramsay is seeking restitution at home.

There’s already bad blood between Ramsay and Lavy. The pair joined forces to launch Laurier, an exclusive restaurant in Montreal but Ramsay was soon axed from the deal. Ramsay is now suing the restaurant and Lavy for £1.7m, while Lavy is counter-suing him for £40m. Ramsay is no stranger to controversy. He was sued by father-in-law Chris Hutcheson, then CEO of Gordon Ramsay Holdings, for £15m back in 2010 after Ramsay sacked him for gross misconduct.

Why do these disputes happen?

Problems and tensions can arise between directors of a company, regardless of how close they are as friends or how efficient the business may be. There are many reasons why disputes between directors happen, one of the director’s may not be meeting expectations in terms of their performance, there may be a conflict of interest between two directors, or disagreements about the future direction of the company.

What are the consequences?

Most disputes start small but escalate and become worse over time. At any point, you may want to consider contacting a solicitor who can try and help to keep everything amicable and help the directors come to some sort of agreement with the least cost and confrontation possible. Director’s disputes can have significant consequences for a business, if two directors at the same company don’t want to work together as in Ramsey and Lavy.

Negotiation is a much better solution that litigation, but if a dispute is bad enough, litigation may be the only option. However, litigation is usually a lengthy process, and the more time that elapses between the dispute arising and a resolution, the more the business is at risk. Seek professional legal advice as soon as possible, to minimise the likelihood of litigation, as an expert in this field may discuss options that you would have never otherwise thought about.

What you should do if a director’s dispute has arisen

Directors have a legal responsibility to put the interests of the business ahead of their own personal interests. If you are a director at a company, and you feel that one of the other directors has done something that conflicts with this idea and you can’t come to an amicable resolution or agreement, it is time to seek professional legal advice, someone will be able to act as an intermediary, help you to weigh up the options and take the appropriate action.

How can Vincents help you?

Many folk like to do business on a handshake, however, put your business agreement in writing. When things go sour and business partners start rattling swords at one another, at the end of the day resolution of the conflict is governed by the written documents in place.

At Vincents we’ve many years experience of helping new business ventures get off on the right foot, putting in place the appropriate legal framework to enable business partners to work effectively together. Similarly, if you have an existing business and are experiencing difficulties with your fellow directors, or just want a health-check on you company documents, we’d be happy to undertake a free review, and advise on any changes in the light of new legislation, or changes in business circumstances.

Don’t wait until the knives are out with your business partners or fellow directors.

Contact Phillip Gilmore, Managing Partner for further advice on phillipgilmore@vslaw.co.uk or call 0800 310 2000