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Nathalie is the owner and principal director of a limited liability company called NUVits LLC, which produces candies. Her company is incorporated in the State of Delaware in the United States.
NUVits was created in 2005, with a share capital of US$50,000, with each share having a par value of US$1. Nathalie is the majority shareholder and originally held 26,000 shares. Charlotte owns 4,000 shares, while Avery owns 7,000 shares. In 2006, Ethan (Nathalie’s cousin), transferred his own 3,000 to Nathalie.
At its inception, the company grew rapidly and as a result, Nathalie set up some subsidiary companies, with a view to expanding into the European market. She created NUVits Holdings GmbH in Germany in 2007 and NUVits Ltd in the United Kingdom in 2008.
While there is no manufacturing operation in Germany, the company maintains an office in Karlsruhe, with ten employees. The UK subsidiary owns a small candy factory in Birmingham with 15 employees.
In 2009, NUVits acquired another – defunct yet still operational – candy company, SourCraze LLC in New Jersey (US) for $20,000,000, with the view to expand its operations and output. It financed the acquisition as follows:
• $10,000,000 from Capital Finance Partners Inc.;
• $5,000,000 from Schmidt Investment, a limited liability partnership registered in Germany; and
• $5,000,000 from Development Holdings (an investment company based in the UK).
The new factory was recommissioned and commenced candy production again in early 2010. Initially all went well such that in 2011 the factory reported a small operating profit with a healthy order book. However, by the end of 2011, the financial crash caught up with the company and resulted in a huge fall-off in orders in the last two quarters. The company reported a serious financial loss for that financial year.
Nathalie and the other shareholders held a board meeting and discussed whether they should cut their losses. All shareholders but Nathalie agreed that liquidation was the best option. Nathalie used her majority holding to defeat the motion, as she believed she could convince a Chinese buyer to buy the factory as a going concern. It later transpired that Nathalie had in fact already commenced negotiations with the Chinese buyer without informing the board. Further, she considerably undervalued the New Jersey operation in order to complete the deal for the company. Nine months later, the Chinese buyer pulled out of the deal. By that time, the New Jersey company had losses amounting to $25,000,000.
Nathalie then held another board meeting and informed the board of the failure of the Chinese deal. She also revealed that NUVits LLC itself was in financial trouble and, with the help of her cousin Ethan, she persuaded the other shareholders to dissolve the company, thereby terminating NUVits’ legal existence.
It transpired however, that NUVits LLC was terminated with debts amounting to $50,000,000 dollars, including the balance of the loans to Capital Finance Partners ($5,700,000 still owed), Schmidt Investment, and Development Holdings ($1,997,000 each).
It also transpired that Nathalie had engaged in capital transfers of funds ($40,000,000 in total) to the two subsidiaries in the UK and Germany, with the aid of the company’s accountants but without informing the board. There is evidence that Nathalie had been using the assets of her foreign subsidiaries to finance the purchase of a villa in Italy, to fund (as tax-deductible ‘business trips’), family-and-friends excursions to the villa (by private jet; none of the friends seems ever to have had any business dealings with any of Nathalie’s companies), and to fund a lavish lifestyle in Florence and Rome.
