Farmison and company director settle with founder over 'secret' takeover deal dispute involving ex-Asda CEO

A spokesperson for Farmison said: “The dispute has been resolved on terms which the parties have agreed to keep confidential.”

It followed an employment tribunal ruling that Mr Pallagi had been unfairly dismissed from the company after a consortium takeover of the business involving former Asda chief executive Andy Clarke.

But Mr Pallagi’s claim against Gateley has not been settled, with the law firm issuing a 29-page statement of defence against his allegations.

Mr Pallagi said he is satisfied agreements have been reached with Farmison and Mr Whittle and hopes the Gateley matter can also be resolved.

“I’m pleased we have settled although it is bittersweet and I now want to put a full closure on this horrid experience,” he said.

Mr Pallagi founded Farmison in 2011 and it was acquired in 2022 by private equity fund Inverleith. Mr Pallagi was retained as CEO but when the firm went into administration in April 2023, he and other staff members were made redundant.

It is Mr Pallagi’s case that he and Mr Whittle agreed to form a consortium to bid for the assets of the business and that he was willing to waive his £650,000 employment claim from redundancy “to the extent necessary to facilitate a sale”. He alleges that it was agreed that Gateley through its solicitor Matthew Brown would represent them with Mr Clarke invited to be an investor. Mr Pallagi alleges he was unexpectedly cut out of the process “at the last minute”.

Gateley had emailed the administrators on April 11 to state it was instructed by a consortium including Mr Pallagi.

On the day of the bidding deadline, April 14, Mr Pallagi learnt of a group call at 11am involving Mr Whittle, Mr Clarke and Mr Brown that he was not invited to. It led to a separate meeting at 9am on the same day which he did attend and where he alleges there was no suggestion his involvement in the deal was in jeopardy.

But the Gateley submission, which is written by Mr Brown, alleges that on April 12 Mr Pallagi had told Mr Whittle and Mr Clarke that he was not able to provide funds for the deal and “they made it clear that if they proceeded to make a bid, the claimant would not be part of the group of investors which would acquire the business if the bid were successful”.

The Gateley response added: “The claim made alleges that the claimant was the victim of a deliberate course of action on the part of the successful bidders and Mr Brown which involved deception, concealment and serious breaches of fiduciary obligations. The claim is founded on a fundamentally inaccurate account of the relevant events.”

When the final bid document was submitted, it purported to waive “some or all” of Mr Pallagi’s £650,000 claim as part of the deal. Gateley said this “was in error not removed from the offer letter” having previously been included in an earlier draft.

Gateley denies any breach of fiduciary duty to Mr Pallagi, stating he was “kept properly informed at all times” and gave implied consent to the firm continuing to act on the bid following the conversation about him not putting up money on April 12.

Mr Pallagi said he was “disappointed” that Gateley is defending its position and said its defence “does not have full context”. He said the bid for Farmison not including him was submitted “without my knowledge or participation”.

Gateley did not wish to comment.