Conran’s restaurants reject £3m feud bill

Sir Terence Conran sat hunched in the witness box before the High Court this week as he faced the friend who had helped him to create London’s most fashionable restaurant empire.

The case has offered an insight into travails he faced running the family business and securing a successor. Sir Terence’s five children, each of whom has a stake in his business, were called to give evidence in a £3 million claim brought by Desmond Gunewardena, his former right-hand man.

Mr Gunewardena said that he was deprived of the value of his shares

Mr Gunewardena, 59, says that he has been “betrayed” by Sir Terence, 85, and has accused his son, Jasper, of being involved in depriving him of a £3 million stake in the Conran business.

Mr Gunewardena, an accountant, joined Sir Terence’s business in 1991 when it had one restaurant, one shop and the design company. Together they turned Conran Holdings into an international dining and design empire that, at its peak, had 2,000 staff and a turnover of £120 million. He told the court: “The long-term intention was that I would succeed him [Sir Terence] in the leadership of the business.”

Mr Gunewardena, who is suing the company, had been named as an executor in Sir Terence’s will, a director of his charitable foundation and guardian of his friend’s finances and investments.

In 2006 Mr Gunewardena led a management buyout of the restaurant division, which included Quaglino’s, Le Pont de la Tour and Bluebird in London as well as venues in New York and Paris. Conran Holdings kept a 51 per cent stake in the business and although Mr Gunewardena resigned as chief executive of the company he remained a director. Seven years later Conran Holdings sold its stake in the restaurants.

Mr Gunewardena says that he was then summoned to the Conran boardroom and told to resign as a director and hand back his 7 per cent stake in the company. Jasper Conran, 56, succeeded his father as executive chairman and with other board members was “responsible for the series of events and communications culminating in the purported compulsory acquisition of my shares”, Mr Gunewardena said. Conran Holdings disputes Mr Gunewardena’s version of events. Jasper Conran denies any suggestion that he was primarily responsible for Mr Guneardena’s removal from the company.

He claims that the company’s constitution was changed “for the purpose of depriving me of the value of my shares”. Instead of being worth £3 million his shareholding, the second largest private stake, was valued at minus £674,293. He says that the value of his shares should be linked to the value of the company but the company says that it should be five times the annual profit or loss, which produces the negative figure. The company actually offered £1 for each of his 1,254 shares.

The court was told that Conran Holdings’ constitution was altered to correct an error, that Mr Gunewardena was asked to resign because he was running a rival business and that after leaving the company he was required to transfer his shares.

Sir Terence told the court: “The dispute that has arisen is regrettable, not least because I admire Mr Gunewardena as a businessman and look back fondly on our many happy years working together.”

The hearings ended yesterday and Mr Justice Mann reserved judgment.

Jasper Conran resigned from the company last year, three days after his father questioned his “experience and knowledge” of furniture in a newspaper interview. In a statement Jasper said that he resigned because he wanted to focus on his own design business.