Stock exchange: Share price nearly halves in a day
Ian Rosenblatt claimed yesterday that he set up a new law firm to buy his old one back because listed business RBG Holdings is insolvent.
The founder of Rosenblatt, now part of RBG along with fellow London law firm Memery Crystal, was responding to a stock market statement issued yesterday that accused him of breaching his consultancy agreement and restrictive covenants, as well as “offensive behaviour”.
RBG, whose chief executive Jon Divers Mr Rosenblatt is trying to oust, announced it had terminated the agreement.
The remarkable public row saw RBG’s already battered share price nearly halve to a mere 1.38p.
The solicitor made public his response to the board of RBG on the basis that the contents of the statement were “substantially untrue and defamatory”.
The principal focus of the statement was on Mr Rosenblatt acquiring a law firm in secret.
He replied: “You are fully aware that the company, through InterPath, has been variously seeking to refinance its HSBC debt, sell its businesses or sell its business assets, either through a solvent or insolvent process.
“Despite the protestations to the contrary of a number of individual members of the board, the company and its trading subsidiary RBG Legal Services is (and has been for a considerable period of time) insolvent.
“The company has been paying InterPath, who are the advisers to HSBC, for the past 18 months or so as a result of its inability to pay interest on the bank debt and to meet other terms of the facility agreement.”
He said the bank/board instructed InterPath to seek bids for the business and that bidders had to be “ready to implement a deal”. To do so, Mr Rosenblatt said, he “required an SRA-regulated vehicle”.
He continued: “All three proposals made by me to acquire the Rosenblatt business would result in having to be ready to trade immediately as well as to take on board large numbers of people and to set up back-office and document management technology not just for practicality but also to safeguard the interests of clients and the goodwill of Rosenblatt.”
Mr Rosenblatt said InterPath “expressly authorised” him acquiring the vehicle. Thus, “your allegation that I was involved in a competing company prior to 10 September is a lie”.
He went on that the purported termination of his consultancy agreement was “baseless” and a repudiatory breach of that agreement. He said he accepted the breach and the agreement was terminated with immediate effect.
He denied being in breach of covenant. “Since my proposal to the company dated 25 November 2024, submitted by Teneo Financial Advisory, I have made every effort to either rescue the company as a going concern or salvage at least part of the business for the benefits of clients, employees and other stakeholders.
“During this process, I have continued to promote the interests of RBG Legal Services and have introduced new clients and new work consistent with my obligations and my desire for RBG Legal Services to have prospered. This includes work for the benefit of the Memery Crystal part of the business.”
Mr Rosenblatt said it was “hard to see how any reasonable board of directors” could have rejected his proposals to take on the financial risk for the whole of RBG Legal Services “seemingly with no alternative prospect”.
He went on to dispute the account of a meeting with a lender at which he was accused of being verbally abusive, which he said began with a representative of the lender, Barings, asking: “How can someone like you let something like this [the financial state of RBG] happen?”
RBG also said it would not be funding a long-running costs dispute Mr Rosenblatt has been involved in and he responded that it was “quite extraordinary” to suggest he was seeking the removal of Mr Divers because of this.
“Jon Divers’ record and the record of the board speaks for itself. It is dire… I sought the removal of Jon Divers because his record demonstrates his utter incompetence as the CEO of this business.”
Mr Rosenblatt also criticised RBG’s reference to conversations about his financial arrangements, “which were confidential, without prejudice and subject to contract”.
It was the board, he said, that was acting in bad faith, not him, as it alleged.
He closed by noting that the stock market statement had been sent to all staff. “Obviously this is calculated, not to enhance the business prospects of the company, but rather to attempt to damage my reputation. As the facts upon which you rely are baseless, I can only assume that is done maliciously.”
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