Dispute over $16.5m shareholder claim admitted to Commerical Court

A dispute regarding the sale of share capital of an Irish fintech company and a claim that certain shareholders are owed $16.5 million (€16.18m) has been admitted to the Commercial Court.

The case centres on an alleged share purchase agreement that coincided with the acquisition in 2019 of Irish-incorporated software provider Barracuda FX Ltd by the US-based Broadway Technology group.

Nine mostly Irish-based individual shareholders in Barracuda, along with AIB Start Up Accelerator Fund Limited Partnership, with registered offices in Saffron Walden, Essex, England, claim a mechanism in the agreement was triggered when Dublin-located software provider ION Trading Technologies Ltd acquired a controlling stake of about 85 per cent in Broadway Technology Holdings LLC (BTH) in February 2020 and there was a subsequent divestment of BTH’s Greyspan service.

The case is against Broadway Barrcuda Holdings LLC (BBH), BTH, with addresses in Wilmington, Delaware, and ION Investment Group Ltd, which has its registered offices on Simmonscourt Road, Dublin 4.

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The plaintiffs say they had entered into a share purchase agreement in March 2019 with BBH, Broadway Technology LLC (BT) and their then holding company BTH. Under the agreement, they say, they agreed to sell the entire issued Barracuda share capital to BBH and BTH. The plaintiffs say the agreement set out various stipulations about the manner and timing of the purchase of certain shares. One of the clauses in the alleged agreement, they claim, provided for the preparation of “put and call” option statements, regarding requirements for the relevant parties to buy and sell certain stock during particular periods and a mechanism for calculating payment that was linked to Broadway FX’s revenue.

The plaintiffs allege that an agreed “acceleration” mechanism would be triggered if all or substantially all of the business or its assets were sold or transferred during one of the put and call periods. They say this process should have been activated when ION acquired the stake in BTH and subsequently divested one of BTH’s services. Due to this alleged triggering, they say, BBH was required to purchase all the option shares from the plaintiffs for $16.5 million. They claim that BBH wrongfully and in breach of the agreement failed, refused or neglected to purchase shares from them for $16.5 million, despite demands. They say it was provided that BT would be deemed the principal debtor in respect of its obligations under the agreement, but it has not paid the money for which they claim it is liable.

ION has been joined to the proceedings due to it having purported to deliver a put and call option statement under the agreement, the plaintiffs say. While BT has asserted that ION has assumed responsibilities of the BBH, as the buyer, BTH and BT, as the guarantor, the plaintiffs continue to assert that the burden of the agreement could not be and was not validly assigned to ION.

On Friday, Rossa Fanning SC, with Niall Ó hUiginn, for the plaintiffs, asked that the proceedings be admitted to the High Court’s fast-track Commercial list. Mr Fanning also requested for the title of the proceedings to be amended to reflect the fact that ION Investment Group Ltd has entered voluntary solvent liquidation. He noted the company has significant assets.

Counsel for each of the defendants indicated, without prejudice, that they were consenting to the matter being entered into the Commercial list.

Mr Justice Denis McDonald said he was “quite satisfied” the proceedings met the criteria for entry. He approved various directions agreed between the parties and made an order to amend the case’s title. The plaintiffs are asking the court to declare that an “acceleration”, within the meaning of a clause of the agreement, took place following ION’s share acquisition. They are seeking damages and in the further alternative, judgment as against BT for $16.5 million. The matter will return before the court in November.