Mohamad Fakih has taken back control of his Mississauga-based restaurant chain, Paramount Fine Foods, putting an end to a long and bitter dispute with his biggest shareholder.
Fakih and his Kuwait-based partner, Ali Noureddine, have been fighting in Ontario Superior Court for four years — to the point that one judge said the relationship had gotten so bad, it was threatening to destroy the entire business.
Now the two have come to an agreement for Fakih to acquire “complete control” of the company. In a joint statement, both sides apologized for their previous public comments and the “harm” caused to their families during the ordeal.
“The trust that we have in one another has been restored,” the statement said.
Fakih, an entrepreneur and philanthropist who has been awarded the key to the city of Mississauga and appointed to the Order of Canada, said the settlement is proof “good people will finish ahead.”
Fakih founded Paramount in 2006, about seven years after immigrating to Canada from Lebanon. The Lebanese restaurant chain currently has more than two dozen locations in Ontario, as well as the Paramount Fine Foods Arena in Mississauga, home to the Raptors 905 of the NBA G League.
“People know me as Mohamad Paramount,” Fakih said. “People save me on their phone as ‘Mohamad Paramount.’ It became like my last name.”
By 2020, Fakih had sold 75 per cent of the company’s shares to Noureddine and one of Noureddine’s associates, Mirza Naeem Javed, for $25 million. But as part of the deal, Fakih kept 50 per cent voting power, which led to a deadlock during the pandemic.
In 2021, as public health restrictions and lockdowns devastated the hospitality industry, Paramount was in a dire financial situation. Fakih sued Noureddine and Javed, alleging they weren’t putting enough capital into the flagging business, forcing Fakih to use more of his own money to prop up Paramount.
Noureddine and Javed fired back, accusing Fakih of mismanaging the business and misusing his company expense account to fund a “lavish lifestyle.” In December 2022, Ontario Superior Court Judge Michael Penny denied the shareholders’ request to remove Fakih as a director, since Fakih had knowledge of the business “no one else has,” and had managed to keep Paramount alive through “very adverse circumstances.”
But the judge also found “ample evidence of questionable transactions which reveal self-dealing” on Fakih’s part, involving expenses charged to the company. The expenses included leases on a Maybach for Fakih, a Range Rover for his wife and payments on his $2.3 million mortgage.
Fakih said his partners of taking the expenses out of context in an attempt to damage his reputation. He’d taken out the mortgage on his home so he could loan the company more money to keep it afloat, he said. And he said the expenses were part of an arrangement with Noureddine and Javed, as a way for Paramount to repay some of the money he’d funnelled into the company.
“They threw all this at me because they knew my reputation was the most important,” he said in an interview with the Star late last month.
Rather than remove Fakih, Penny called for a third director to act as a tiebreaker for the warring shareholders. “There is evidence that Paramount is in financial crisis. It may be insolvent. Its financial reporting is in disarray,” Judge Penny wrote in his decision. “The deadlock must be broken, or all hands will go down with the ship.”
Fakih suggested a lawyer who specialized in corporate governance; Noureddine and Javed suggested Second Cup Coffee Company CEO Jim Ragas. The judge chose Ragas in early 2023.
“Honestly, my impression going in was that I felt sorry for (Noureddine and Javed),” Ragas said in an interview with the Star. But after a court-ordered financial inspection, Ragas said it became clear that Fakih had loaned more money to the business than the other side.
“At the end of the day, he put in more,” he said. He declined to say how much Fakih had contributed, except that it was “a substantial number.”
Allegations that Fakih was misusing expenses were “totally incorrect,” Ragas said.
In response, Noureddine’s lawyer John Pirie referenced back to Judge Penny’s decision, saying in an email “those findings stand and it is not open for anyone to now say that the findings were incorrect.”
Ragas said he advised both sides to “sit down, talk and come to a deal because nobody’s going to win other than your lawyers.” Eventually, they agreed that Fakih would acquire a majority interest in the business and Noureddine would become a minority shareholder and silent partner. (The other partner, Javed, sold his shares to Noureddine last year, Ragas said.)
In their joint statement, Noureddine and Fakih said they “have both withdrawn any earlier comments made against each other.”
“I have partnered with Mohamad Fakih because of his stellar reputation as a businessman,” Noureddine said in a news release, “and I will continue to support Paramount achieving new heights under his leadership.”
