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Gordon Ramsay’s legal war with father-in-law highlights dangers of family business

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Of course, the hotheaded Hell’s Kitchen frontman isn’t the only famous cook to find himself experiencing business woes this year. 

2015 started badly for Marco Pierre White, incidentally he’s Ramsay’s former mentor, who found his pub ventures suffering from “cash flow problems” in January.

A feud between Ramsay and his wife’s father Christopher Hutcheson, who was previously the business manager of the Gordon Ramsay Group, has been waging on since the latter was fired back in 2010.

In November last year, the row was taken to high court and it came to light that Hutcheson had used a ghostwriting machine to fraudulently sign a lease for the York & Albany gastropub back in 2007, making Ramsay responsible for an annual rent of £640,000 over 25 years.

During the case, Ramsay had spoke of feeling like a “performing monkey” while working alongside his father-in-law, claiming he was completely unaware the machine was used to secure the deal on the York & Albany, which made Ramsay the personal guarantor of the venue.

At the time, Ramsay said: “The company is still in the hook for the lease, and what was devastating for my wife and I was that we were guaranteeing it until 2033. There were many horrific discoveries because I can recognise my signature and pinpoint one forged by machine.”

The chef had hoped the agreement would be declared null and void as a result of the forgery, but landlord Gary Love called Ramsay’s claims “absurd” and opposed the falsification.

The ghostwriting machine was indeed approved by Ramsay, but only for use on “merchandising material” – a responsibility Hutchenson is said to have abused multiple times.

In January the trial came to a head when the judge ruled in favour of Love to enforce the campaign, leaving Ramsay with a legal bill of around £1m.

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Law firm Hugh James has said that boundaries within a business are important, but described them as crucial in a family-run enterprise due to emotional attachments involved.

One way this is possible is with a shareholders’ agreement that clearly outlines roles, ownership and rewards, preventing fallout from departures – or use of ghostwriting machines – the firm explained.

Sarah Jones-Howells, a corporate law specialist at Hugh James, said: “Any business can face challenging decisions, but for a family business it is vital that a disagreement over the business doesn’t spill over into family relationships, or vice versa. There is such a high level of trust in family businesses that they often remain very informal even when they have reached a substantial size.”

Key family business considerations should include:

  • How the business should be conducted and managed, including the division of roles and responsibilities within the business
  • The levels of authority required for decision-making
  • How rewards are shared
  • Plans for future growth and diversification, including succession and exit strategies 
  • What should happen if a family member working in the business decides to leave or dies
  • What should happen if a relationship breakdown affects the ability of family members to work together amicably 
  • Extent to which  non-family members should be involved in the business 

“Formalising things through a shareholders’ agreement helps to ensure that the right structures are put in place and that everyone’s contribution is recognised as the business develops,” Jones-Howells added. “Sitting down at least once every five years to consider how the business has grown and changed limits the scope for an acrimonious row.

“Unlike articles of association which are available at Companies House for all to see,  shareholders’ agreements are usually  confidential documents, so  family members can be comforted by the fact that any personal issues covered by the agreement will be kept out of the public domain.”

Image: Shutterstock

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