Executive Summary
- The High Court ruled that defendants Richard Huw Lewis and Melanie Probert are liable to Learning Curve (NE) Group Limited (“LCG”) for breach of warranty under a Share Purchase Agreement (SPA) dated 29 October 2021.
- Damages awarded total £5,211,625, over half of LCG’s claim (£10,180,040), rejecting defendants’ counterclaim to recover £783,325 paid under an indemnity.
- The SPA caps liability based on consideration received: £15,972,257 for Lewis and £840,650 for Probert, limiting recoveries accordingly.
- Central to the dispute is an ESFA funding over-claim of £1,247,680 for academic year 2020/21, identified post-SPA, with a net repayment of £783,325 after deductions.
- The case hinges on interpretation of warranty and indemnity provisions, funding rules, and the impact of ESFA funding on company valuation and defendants’ knowledge.
Sanctions Highlights
- — No sanctions implications identified in the case.
Emerging Risks
- Potential reputational and financial risks for companies reliant on government funding subject to complex regulatory audits.
- Risk of significant post-transaction liabilities arising from funding over-claims discovered after share purchase agreements.
- Increased scrutiny on warranty and indemnity clauses in M&A contracts involving publicly funded entities.
- Challenges in valuation accuracy when contingent liabilities related to funding compliance exist.
Geopolitical Impact
- The case involves UK entities and funding agencies, notably the Education and Skills Funding Agency (ESFA), a UK government body.
- The company’s operations span England and Wales, with funding regimes differing between the two jurisdictions.
- The litigation underscores the importance of UK regulatory frameworks in education funding and their impact on commercial transactions.
- No direct involvement of Iran, despite initial mention; geopolitical significance limited to UK domestic regulatory and commercial law context.
Economic Intelligence
- The SPA transaction valued at £16.8 million, reflecting enterprise value based on EBITDA and cash adjustments.
- ESFA funding accounted for approximately 50% of the company’s income, highlighting dependency on public funds.
- Over-claimed funding of £1.25 million materially affected company valuation and post-sale liabilities.
- The judgment clarifies financial exposure limits for defendants under SPA caps, influencing risk allocation in future deals.
- The case illustrates financial risks in education sector acquisitions tied to government funding compliance.
Strategic Recommendations
- Parties engaging in M&A involving publicly funded entities should conduct rigorous due diligence on funding compliance and audit risks.
- Draft SPA warranty and indemnity provisions with clear caps and mechanisms addressing post-closing funding adjustments.
- Monitor and manage funding audits proactively to mitigate over-claim risks and potential clawbacks.
- Consider specialist legal and financial advice on interpreting funding regulations and their impact on transaction value.
- Maintain awareness of jurisdiction-specific funding rules and their implications for cross-border education and training businesses.
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**Source Notes:**
Sanctions Intelligence Digest, [https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1889.html](https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1889.html)