Lush UK is allegedly suing Lush US/Canada. Weird right? Lush claimed in a lawsuit filed on July 7th that Mark Wolverton, CEO of Lush and his companies are breaching terms in a 2003 joint-venture agreement, which brought Lush to the U.S according to Biv.com.
According to reports, allegedly the lawsuit states that Mark Wolverton and his companies are guilty financial mismanagement due to accusations of funneling money from Lush’s U.S. operations into Canadian operations, which are controlled by Mr Wolverton.
The lawsuit alleged that, “Wolverton has outright refused to issue shareholder dividends despite that Lush would have been otherwise entitled to at least US$18 million and 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.”
“Wolverton has been so adamant against allowing any corporate input from Lush that he has even denied the majority shareholder’s request to access and audit the corporate book.”
LUSH UK says that Mr Wolverton has blocked access to Lush directors from viewing Lush U.S. corporate information because the finances are intertwined with Lush Canada’s operations. Apparently it seems like Lush US runs under an entirely different agreement and is considered a separate company that’s not part of Lush Canada. It’s confusing I know considering Lush is manufactured, sold, and shipped from Canada to the US.
Since both companies are separate entities and the Lush director from the UK is not on the Canadian board but is on the US one Wolverton feels that she does not need to be privy to the corporation information for Lush US.
“There is no wall between team members to separate their work for the U.S. entities from that for the Canadian entity. And because the financial information and funds for the U.S. and Canadian entities are wholly enmeshed, it is unclear which corporation is paying for which expenses.”
There’s a lot going on here that doesn’t make sense since Lush NA continues to grow and is highly successful. Mr Wolverton is accused of other offenses in the lawsuit but the entire thing seems nonsensical.
It seems like there’s a lot of confusion about the separation of Lush NA and Lush USA. But it also seems like they could have easily settled this outside of court.
Does anyone feel the same?
What do you think of LUSH UK suing Lush USA.