Lush Ltd. has filed a lawsuit against Mark Wolverton, who brought Lush to North America in 1996, claiming he and his companies are breaching terms of a 2003 joint-venture agreement, which brought the brand to the United States, according to an article from Business In Vancouver.
The lawsuit alleges that Wolverton–who is based in Vancouver and controls Lush’s Canadian operations–and his companies are funnelling money from the brand’s U.S. operations into its Canadian operations, according to the article.
Based in the United Kingdom, Lush owns 53.1% of the U.S. Lush business and per the 2003 agreement, has the right to appoint a corporate director who is entitled to all corporate documents, as well as the right to have input surrounding all corporate decisions, Business In Vancouver reports.
Wolverton is accused of refusing Lush directors access to U.S. Lush corporate information because the business’ finances are intertwined with Lush’s Canadian operations, which are controlled by a different company, and under a different agreement that does not give Lush authority, according to the article.
The lawsuit cites numerous additional complaints against Wolverton.
“Wolverton has outright refused to issue shareholder dividends despite that Lush would have been otherwise entitled to at least US$18 million,” Lush alleged in its lawsuit, Business In Vancouver reports.
“He has reduced excess cash by creating an unnecessary and bloated budget for capital expenditures; redefining payment terms to require the Lush U.S. corporations to make payments to other entities upfront; and funnelling funds to his own pockets, and to those of his personal company, under the guise of management fees.”