Executive Summary
- The case concerns a dispute between Mr Barry Maloney and Falcon VII Investment S.A.R.L. over control of Falcon Topco Limited ("Topco"), a Jersey-incorporated holding company.
- Topco owns a significant stake in Workhuman, an Irish software company with over US$1 billion annual turnover.
- Mr Maloney holds a 49.44% shareholding in Topco, with Falcon VII holding 7% but controlling 75% of voting rights via Original A1 shares.
- The dispute centers on the interpretation of clause 5.4 of the shareholders' agreement ("SHA") and related covenants governing the management and financial arrangements of Topco and its subsidiaries.
- The financing structure includes a US$134.9 million secured debt facility provided by Falcon VII Financing S.a.r.l., repayable by December 2025, "stapled" to Falcon VII’s equity redemption.
- The breakdown in relations followed Falcon VII’s refusal to consent to a proposed Workhuman acquisition, triggering contested shareholder resolutions and litigation.
Sanctions Highlights
- Sanctions implications are present due to the involvement of entities incorporated in the UK and Luxembourg, and the financial structuring involving ICG entities.
- The "stapled" nature of debt and equity interests creates potential exposure to designation risks if Falcon VII or related entities were sanctioned.
- The case references "Default Events" and "Services Defaults" which could trigger changes in control or voting rights, potentially implicating sanction compliance.
- The complex cross-jurisdictional ownership and financing structure requires careful monitoring for sanction breaches, especially given US and UK sanctions regimes.
Emerging Risks
- The dispute risks destabilizing governance of Topco and Workhuman, potentially impacting the planned IPO and exit strategy.
- Falcon VII’s refusal to consent to key transactions and the invocation of restrictive covenants may delay or derail strategic corporate actions.
- The "ICG Realisation Event" conditions linking debt repayment and equity redemption create liquidity and refinancing risks if the dispute prolongs.
- Cross-border litigation and regulatory scrutiny may increase operational and reputational risks for involved parties.
Geopolitical Impact
- The involvement of UK and Luxembourg entities highlights the transnational nature of investment and corporate governance disputes.
- ICG, a UK-headquartered fund operator, and its Luxembourg SPVs are central, reflecting EU-UK-US interconnected financial ecosystems.
- The case underscores the importance of compliance with UK and US sanctions regimes in cross-border private equity and debt financing.
- Potential geopolitical tensions could arise if sanctions regimes tighten on Luxembourg or UK financial intermediaries linked to the dispute.
Economic Intelligence
- Workhuman is a market leader in cloud-based employee recognition with over US$1 billion turnover, making it a significant tech sector player.
- The financing structure involves over US$134 million in secured notes with a high 15% coupon, indicating high-risk/high-return investment.
- The dispute may affect valuation and investor confidence ahead of the anticipated Workhuman IPO.
- The "stapled" debt-equity structure ties Falcon VII’s exit to debt repayment, impacting capital markets and refinancing options.
Strategic Recommendations
- Parties should conduct rigorous sanctions due diligence on all entities and transactions to mitigate designation risks.
- Consider mediation or arbitration to resolve governance disputes swiftly and protect IPO timelines.
- Review and reinforce compliance frameworks addressing Default Events and covenants to avoid inadvertent breaches.
- Monitor geopolitical developments affecting UK and Luxembourg financial entities to anticipate regulatory changes.
- Prepare contingency financing plans to address liquidity risks if the dispute delays debt repayment or equity redemption.
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**Source Notes:**
Sanctions Intelligence Digest, [https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/240.html](https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/240.html)