A dispute over the true value of shares in Rivada Networks has erupted amid a bitter lawsuit between founder Declan Ganley and one of its shareholders.
David Shuman, an investor in Rivada, is suing Mr Ganley to force him to pay the remainder of a default debt judgment that, according to court filings, now stands at nearly $20 million (€18 million), after interest.
Mr Ganley has claimed that the value of 20,000 shares he was recently forced to turn over to Mr Shuman at auction ought to be enough to settle the matter since it “well exceeds the amount of the default judgment”.
He has put the value of those shares at least $15.1 million, based on recent certain share transactions. However, during a deposition as part of the litigation, he suggested that this figure could be even higher, at more than $100 million, based on more recent fundraising.
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Mr Shuman has described the valuation as “absurd” in filings this week to the supreme court of New York. He said “Ganley has no idea how much the stock is worth”.
He also argues that Mr Ganley was asked about the value of the shares in a deposition in February but, in Mr Shuman’s characterisation, he testified “evasively and unconvincingly”.
In excerpts from his recent deposition by Mr Shuman’s lawyers, Mr Ganley says on several occasions that he doesn’t know the value of shares in Rivada, before then saying that in recent fundraising they had sold “at the upper end $10,000 a share”.
Mr Shuman’s lawyers said that “the proof is in the pudding” because he claims he offered Mr Ganley and Rivada the chance to buy the shares back for $336,000 after the auction, but that they “never even responded to the offer”.
He said that Mr Ganley and Rivada were “unwilling to put their money where their mouths are”, having failed to make an offer above $16 per share at auction and then having “rejected a subsequent offer to buy the shares for $336,000 — or $16.8/share”.
In the most recent filings in the New York supreme court, Mr Shuman accused Mr Ganley of being “a serial default debtor, attempting to run the clock with legal manoeuvres in multiple jurisdictions, arguments made, lost, and then repeated, and positions fundamentally at odds with the written documentation”.
As part of the litigation, Mr Ganley has had to turn over a significant number of personal assets to satisfy the default judgment, including several companies, a pub in Galway, four acres of land, and several vehicles.
He claimed in his legal filings recently 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”.
He also accused Mr Shuman of “extortion” and “fraud” for wrongly having held on to a separate tranche of 150,000 shares in the company. Those shares have been valued by Mr Ganley at more than $115 million, though at the higher value he mentioned in the deposition they could be worth as much as $750 million.
Separately, Rivada is raising billions of dollars to build out a private, unhackable, satellite-based internet communications system called the OuterNet.
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