Declan Ganley, the chief executive of Rivada Networks, has asked a court in New York to declare that a multimillion dollar debt judgment has been satisfied by the turnover of Rivada shares, the value of which “well exceeds the amount of the default judgment”.
Mr Ganley has been involved in a long-running dispute with David Shuman, an investor in Rivada, over a default judgment Mr Shuman secured against him. The value of that judgment is estimated now to stand at $20 million (€18.4 million), after interest.
To fulfil that judgment, Mr Ganley has had to turn over a number of personal assets, including shares in Rivada, a number of companies, a pub in Galway, four acres of land, and several vehicles, including a number of Massey Ferguson tractors.
In court papers Mr Ganley now claims that the judgment has been satisfied “at least twice over”. He has asked the judge to issue an order declaring that the default judgment has been fully satisfied. Failing that, he has asked the judge to call an evidentiary hearing in relation to the value of the assets so far turned over.
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Mr Ganley claims it is “black letter law that a creditor cannot get double recovery from a single debt”, and that allowing Mr Shuman to claim any more would permit him “to profit substantially and unfairly”.
Mr Ganley argues that the debt was first satisfied when $5.8 million was paid back to Worth Capital, a New York investment fund from whom he originally borrowed the money. Mr Shuman served as guarantor on that loan.
The papers show that Mr Ganley claims that the debt was “satisfied again” through various court orders secured by Mr Shuman in relation to Mr Ganley’s personal assets.
The largest portion of those assets, the filings state, consists of 20,000 shares in Rivada that Mr Shuman got through a court-ordered public auction.
Mr Ganley claims that Mr Shuman acquired those shares as a “fire sale” price of $20 per share, for a total of $400,000 in the form of a credit bid – effectively using the value of the judgment as credit to acquire the shares.
His legal filings state that “recent sales of this same stock have regularly fetched at least $755.65 per share, making the 20,000 shares that Astraea obtained through its credit bid worth at least $15.1 million”.
The legal filings also suggest that it is possible to value the shares more highly than that. In a recent deposition Mr Ganley said the full value of Rivada was $12 billion, in which case “each Rivada share would be worth in excess of $5,000 and [Shuman’s] 20,000 shares over $100 million”.
In addition, Mr Ganley argues that “in parallel to these enforcement actions, Mr Shuman has attempted to claim ownership to nearly 150,000 shares of Rivada Networks”, which were part of the collateral provided for the original loan.
Mr Ganley claims that Mr Shuman was supposed to have returned those shares once the Worth loan had been settled, while Mr Shuman claims no such deal ever existed, and no record of it was written down.
However, in the latest filings, Mr Ganley says that “contemporaneous written communications, in addition to testimony and affirmations of parties involved, adequately show that the agreement existed”.
In an affidavit filed along with the recent motion, he accused Mr Shuman of “extortion” and “fraud”.
The court papers show several different potential values being ascribed to Rivada’s shares. For example, in relation to the collateral shares, Ganley’s lawyers argue that their value “exceeds $115 million”, based on the valuation of $755 per share.
In another affidavit filed with the motion, Douglas Lynn, Rivada’s chief financial officer, said the company had issued shares over the past three years at various prices. Rivada is currently in the midst of raising billions of dollars to build out a private, unhackable, satellite-based internet communications system called the OuterNet.
In 2022 it raised funds from an unspecified number of investors at a price per share of $755.65. And more recently, “funding has generally been in the form of convertible debt, from major investors who must remain confidential, with conversion prices generally set between $770.10 and $827.45, per share, subject to adjustment in certain circumstances”.
None of the documents filed to date give any reference to the higher share price of $5,000, as indicated by Ganley in his deposition. However, at that price, the total value of the shares in dispute between Ganley and Shuman could be closer to $750 million.
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