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Businessmen in dispute over company set up to sell baby milk in China

A NUMBER of businessmen are in dispute over a company set up to sell baby milk formula to China, the High Court heard.

BM Formula Ltd  (BMF) was set up in August 2013 to exploit the US$12 billion powdered baby milk market following the relaxation of China's "one baby policy". 

A key factor in the company's success was that its product passed stringent Chinese regulatory standards brought in after the 2008 melamine-tainted milk powder scandal in that country.

Two shareholders of BMF today obtained orders restraining two other shareholders over what it was claimed was wrongful conduct, including allegedly trying to sell the product through a Hong Kong registered company.  The claims are denied.

Paschal Bergin and Sean Bradshaw,  shareholders in BMF and their company Holtal Ltd, petitioned the court under the Companies Act for an injunction restraining alleged oppressive conduct by fellow shareholders in BMF, Patrick Flanagan and Frans de Ru.

High Court president Mr Justice Nicholas Kearns granted orders restraining Mr Flanagan and Mr de Ru from marketing, dealing in, selling, or promoting the company's baby feed formula pending further order. 

He also ordered Mr Bergin to lodge a €1m bond in court to meet any judgment for damages in the case.

The order also prevents the respondents from dealing in, selling,  or charging any shares in the firm.  It also prevents them, pending further order, from taking any steps to alienate any interest in the milk formula.

The orders were made with the agreement of Mr Flanagan and Mr deRu.

The judge urged the parties to continue to take steps to resolve the matter through mediation for what he said was "a very favourable business" for an Irish company to be involved in.

Earlier, Gabriel Gavigan SC, for the petitioners, said his clients claim Mr Flanagan dn Mr de Ru entered into an unlawful arrangement to plunder the  assets of the company and he was seeking an injunction to maintain the status quo pending full hearing of the matter.

Michael Howard SC, for the respondents, said his side were fully contesting the claims and they say petitioners themselves set up a cloned company in order to hive off the assets of the firm whereby his clients would not derive any benefit from the business.

They had effectively repudiated the arrangement entered into to sell the milk formula under the brand name "BMP", counsel said.  

Mr Justice Kearns said, having read affidavits in the matter, he was only inclined to grant an injunction restraining the respondents from marketing the BMP product as it would be impossible to reach any other conclusion at this stage given there were so many allegations and counter allegations.

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