There’s a deep and very special bond that forms between an entrepreneur and the company they found. It’s a brave person that comes between the two.

That’s why I have special sympathy for Gene Tilbrook and Kevin Campbell, the chairman and chief executive of waste management giant Transpacific Industries.

Yesterday Transpacific revealed that the founder and former executive chairman of the company, Canadian-born rich list member Terry Peabody, is suing the company for $4.6 million over the way it ran a capital raising in October 2011.

Peabody is angry that Transpacific rebuffed a last-minute offer from private equity giant KKR to take a significant stake in the company at 66c a share, 4c higher than the price eventually achieved in the book build that was conducted as part of the capital raising.

The refusal to accept the bid – which was made after the book build officially closed – meant the amount Peabody received for not participating was 12c a share, rather than 16c a share. His total take was $4.6 million lower as a result, and that is what he is heading to the Queensland Supreme Court to recover.

Peabody told the Australian Financial Review from Canada that he “continued to have the utmost confidence in the company that I founded”.

“But in my opinion, the board has made the wrong decision. The board has refused our approaches to resolve this situation and regrettable legal action is our last resort.”

Transpacific said in a statement it “denies any liability and intends to defend the proceedings vigorously”.

With a market value of almost $1.5 billion and $300 million in the bank thanks to the capital raising, Transpacific won’t have any trouble meeting the potential costs of the legal action.

But Tilbrook and Campbell must be shaking their heads. This isn’t the sort of distraction that you need when you are trying to turn around a company that has seen its share price fall from $10 prior to the GFC to just 80c.

But unfortunately, these things can happen when the founder of your company still casts such a big shadow over it.

Transpacific was formed by Peabody in 1987, but the modern version of the company really came together in 2000, after Peabody sold his Western Star trucking business to Daimler Chyrsler for $1 billion.

Peabody retained the rights to distribute MAN trucks and buses in Australia and stuck this business into Transpacific, then a liquid waste management company.

Fuelled by cheap credit, Peabody went on an acquisition spree. After floating Transpacific in May 2005 at $2.40 a share, he bought more than 47 separate companies in 2006-07, at a cost of about $2.6 billion.

But as the size of the company increased, so did its debt load. When the GFC hit, Transpacific’s $2 billion in debt became a millstone around its neck.

In June 2009, Transpacific’s situation had reached a point where Peabody was forced to agree to an $800 million bailout led by private equity firm Warburg Pincus, and accept conditions whereby any major transactions had to be approved by Warburg.

These restrictions appeared to chafe with the aggressive Peabody. He retired in June 2010 but continues to hold an influential stake in the business – 176.3 million shares, or about 7%.

It’s the sort of stake that would have a board looking over its collective shoulder – and with good reason, given how active a shareholder Peabody has been.

In October 2010, Peabody teamed up with institutional shareholders to oust two independent directors.

In March last year, he was rumoured to be seeking the support of other institutional shareholders for a board shake-up.

In October 2011, CFO Stewart Cummins told the AFR he had met with Peabody several times since being joining the company in late May.

“He always wanted to know what we were doing about supporting the share price,” Cummins said at the time.

“He is a shrewd businessman and the architect of this company.”

An architect who will now face off in court against that company – or perhaps more pointedly, the board.

Whether this court case is the start of a bigger move by Peabody remains to be seen. He could continue to agitate for change but with Warburg Pincus controlling almost 40% of the company, it won’t be easy.

Ironically, the last few months suggest Peabody’s most profitable move might be to let Tilbrook and Campbell keep doing what they are doing.

Since the capital raising that will be at the centre of the court case, Transpacific shares have risen 31%, lifting the value of Peabody’s stake from $108.5 million to $141 million.

In other words, the capital raising has helped add about $32.5 million to Peabody’s fortune – or about seven times the amount he’s suing Transpacific for.