Meaning
The process of restoring money or property to an injured party to undo unjust enrichment. In disputes between founders, restitution recovery focuses on clawing back assets that were wrongly transferred or taken from the firm. It measures the gain of the wrongdoer rather than the loss of the victim to determine the amount to be returned.
This remedy does not apply to punitive damages or compensation for future lost earnings.
Remedial Goal
This legal approach aims to put the parties back in the position they would have occupied if the wrong had not occurred. It focuses on fairness by ensuring that no founder retains an improper benefit from their misconduct. This acts as a deterrent against the unauthorized removal of company property during a split.
Calculation Method
Valuation is based on the actual value of the taken assets at the time of the taking. This requires a forensic trace of the funds to establish the exact sum of money that was transferred. If the assets have increased in value, the defendant may have to return the higher amount to prevent them from profiting from the delay.
This calculation avoids hypothetical scenarios and relies solely on verifiable transaction histories.
Asset Restoration
Handing over these holdings can take the form of cash payments or the transfer of specific property. This is different from damage awards, which only pay for losses. This restoration returns actual assets to the balance sheet of the startup.
