Shares in RBG Holdings PLC (AIM:RBGP), the holding company for law firms Rosenblatt and Memery Crystal, plummeted 40% to 1.55p after the group terminated its agreement with Ian Rosenblatt and released some more details over its recent dispute.
The contract with Ian Rosenblatt, the founder of the former of those two firms, has been ended with immediate effect due to what RBG said were breaches of a consultancy agreement and of restrictive covenants as well as "offensive behaviour unbecoming of a solicitor and consultant".
The emergence of these details follows the requisitioning of a general meeting by Ian Rosenblatt just before Christmas where he called for a shareholder vote to remove the current group CEO, Jon Divers, and two current non-executive directors.
Today's statement said that Ian Rosenblatt bought a company registered as a firm of solicitors last year and in December changed its name to Rosenblatt Law Limited, hired Tania MacLeod, until recently head of dispute resolution at RBG's Rosenblatt and a board director up until October, and was working to register the internet domain name rosenblatt-law.com and rosenblattlaw.co.uk.
MacLeod tendered her resignation as a director of RBG Legal Services in December and on 3 January resigned from the company.
"From the chronology of these events, it is evident that Ian Rosenblatt was in control as the owner of another company regulated by the SRA to provide legal services at least three weeks before he first contacted the Chair of RBG Holdings PLC (AIM:RBGP) demanding a change of CEO in late September 2024," the company said.
RBG said in September its board wrote to Rosenblatt and MacLeod as partners in the partnership known as Winros informing them that it would no longer be funding litigation on a case versus Global Energy Horizons Corporation, which was followed by Ian Rosenblatt's aim to oust Jon Divers as CEO being leaked to the press on 1 October.
The company noted that its restrictive covenants for Ian Rosenblatt were put in place in the summer to expire in July 2028 with negotiations for a new pay structure having "stalled over what the board considered to be excessive expenses demands from Mr Rosenblatt including, inter alia, a private office suite to be fully funded, a renewed demand for the Winros/Global litigation to be funded by the company, and the board's requirement for a Relationship Agreement with Mr Rosenblatt".
Furthermore, RBG said during its discussions with its lender, HSBC, about a potential refinancing, management found out from one potential funder that a "meeting that had been held between the same lender, Ian Rosenblatt and Tania MacLeod in mid-November of 2023" and that "Ian Rosenblatt had been verbally abusive to the lender at this meeting in 2023".
** Update: Share price fall extended **