Shareholders at Tomos Watkin have given up the fight to save the Welsh brewer but may still sue the board for selling the pub estate without their knowledge or permission.
The defeat signals the end of a six-week bitter struggle, and the end for Tomos Watkin.
In March, directors of the company agreed to sell the pub estate to former managing director Duncan Murray, now of Celtic Inns, and the brewing interests, to the Hurn Brewery.
But a body of shareholders, led by founder Simon Buckley (pictured) and Clive Scourfield, challenged the decision saying it contravened Section 320 of the Companies Act.
Mr Buckley, who left the business last year, said: "The assets were sold without shareholder approval and the pubs were not market tested."
He said that there would have been three or four other companies interested in the sale and that the package should have been open to all.
"Questions have to be asked," he said. "Like why did the Bank of Wales insist the pubs were sold to Duncan Murray and why was it that the brewery, which was worth £280,000, was sold in a deal worth £85,000? The kegs were worth that alone."
Before it was broken up Tomos Watkin had been in talks to buy the James Williams pub estate in a deal valued at £9.1m. Equity partner Barclay Ventures was understood to have pulled the plug at the last minute.
It is thought that Mr Murray had since assumed the position of would-be-buyer for the Williams business. But he plans to launch a new pub company, based in Wales.
Mr Buckley said the competence of the board was questionable. "What kind of non-compete clauses did the board make Duncan Murray sign when he was appointed last year?
"It looks like the company has been sold to satisfy creditors because the board had no alternative strategy."
The opposing group of shareholders were set to challenge the sale in the courts. But some shareholders, who invested in Tomos Watkin as a tax shelter, warned they would sue the rescue group.
As this article was posted, the rescue group issued this statement: "The Tomos Watkin board has remained committed to putting the company into compulsory liquidation, and has put pressure on third parties to remove their support for the rescue group's campaign.
"It is with great reluctance, this group of shareholders has given up its fight to save the company from liquidation. They may still sue the board for damages for selling the pub estate without their knowledge or permission."
Related stories:
Trade waves goodbye to Tomos Watkin (13 March 2002)