Hewlett Packard Enterprise (HPE) has confirmed its intention to continue with a high court lawsuit against the estate of the late tech tycoon Mike Lynch, seeking damages of up to $4 billion (£3 billion).
HPE stated that it would proceed with the legal action despite Lynch’s death last month, when his yacht sank off the coast of Italy. In a statement, HPE declared it would follow the legal proceedings ‘through to their conclusion.’
In 2022, HPE won a civil claim against Lynch in the English high court, accusing him and his former finance director, Sushovan Hussain, of fraud related to HPE’s $11 billion takeover of his software company in 2011. Although a ruling on damages is still pending, Judge Hildyard noted expectations that the final damages would be ‘substantially less than is claimed.’
Lynch, who was 59 years old, had been acquitted of a separate criminal fraud charge in the United States in June related to the same deal. Tragically, Lynch and his 18-year-old daughter Hannah were among seven people who died when the yacht, Bayesian, sank off the coast of Sicily last month.
According to HPE, ‘In 2022, an English high court judge ruled that HPE had substantially succeeded in its civil fraud claims against Dr Lynch and Mr Hussain. A damages hearing was held in February 2024, and the judge’s decision regarding damages due to HPE will arrive in due course. It is HPE’s intention to follow the proceedings through to their conclusion.’
However, there are significant considerations that HPE must balance in pursuing Lynch’s estate for damages. Oliver Embley, a partner at the London-based law firm Wedlake Bell, noted, ‘They are a publicly traded company, and they have a fiduciary duty to their shareholders. Legally they are obliged to act in their shareholders’ best interests, but morally continuing the claim is questionable. And from a publicity perspective, it could backfire on them. Effectively they would be suing his widow and that does not look good optically.’
Lynch’s widow, Angela Bacares, was among the 15 people who were rescued when the yacht sank. The Sunday Times rich list reported that the combined wealth of Lynch and Bacares was £500 million. The Sunday Times also initially reported that HPE was poised to pursue Lynch’s widow for up to $4 billion.
Additionally, Charles Elson, founding director of the Weinberg Center for Corporate Governance in Delaware, where HPE is incorporated, stated that the company would likely be protected from a shareholder lawsuit if it chose not to seek damages from Lynch’s estate. He explained, ‘If you make a business decision that was in good faith and were informed and careful about making it, then that decision is protected legally.’
The pursuit of Mike Lynch’s estate by HPE highlights the complex interplay between legal obligations and moral considerations for publicly traded companies. The outcome of this case will likely set a precedent for future corporate actions in similar circumstances.
