Web Summit seeks to prevent co-founder’s firm pursuing €5m-10m profit share claim

Web Summit holding company Manders Terrace is seeking to prevent a company of David Kelly, a co-founder of the summit, pursuing a profit share claim for between €5 million and €10 million against it.

At the Commercial Court on Monday, Mr Justice Denis McDonald granted an application by Bernard Dunleavy SC, for Manders Terrace, for permission to apply to have a preliminary issue decided in the proceedings by Mr Kelly's company Graiguearidda Ltd.

He returned the matter to March 28th.

Rights

The application is aimed at having Graiguearidda’s profit share claim dismissed as statute barred, made outside the applicable time limits.

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Mr Dunleavy told the judge his side had sent correspondence to the Graiguearidda side concerning having the matter decided as a preliminary issue.

Graiguearidda owns Mr Kelly's 12 per cent stake in Manders Terrace and is suing that firm; Paddy Cosgrave, its main shareholder and Web Summit chief executive and co-founder; and Mr Cosgrave's vehicle, Proto Roto, for alleged oppression of shareholders' rights.

Mr Dunleavy, for the defendants, previously told the court they would “vigorously defend the proceedings”.

Manders Terrace has separate proceedings against Mr Kelly over alleged breach of duties as a company director.

Various pre-trial matters in both sets of proceedings were before Mr Justice McDonald on Monday, including applications by both sides seeking extensive discovery of documents against each other.

Frank Kennedy, for Graiguearidda, said certain discovery had been agreed and, while it was not expected all discovery matters would be agreed, it was anticipated further progress in relation to narrowing the discovery issues would be made in correspondence.

Mr Dunleavy agreed with Mr Kennedy and the discovery matters were adjourned for two weeks to facilitate engagement.

The judge also agreed to permit Manders Terrace to bring a motion seeking determination of a preliminary issue to have the profit share aspect of Graiguearidda’s proceedings struck out as statute barred.

Conduct

In an affidavit in his proceedings, Mr Kelly has claimed that Mr Cosgrave's exercise of his director's powers and conduct of the company's affairs was often motivated by his enmity for fellow founder and shareholder, Daire Hickey.

Mr Kelly claims Mr Cosgrave’s conduct often disregarded minority shareholders’ interests and was directly oppressive of Mr Hickey.

Manders Terrace has alleged in its proceedings, taken in Ireland and California, that Mr Kelly breached his duty to the company by attempting to secretly use Web Summit's resources to set up an investment fund for his own personal gain.

Mr Kelly has said these claims are without foundation. He alleges that Mr Cosgrave behaved oppressively and aggressively towards him and there was a “complete absence” of any meaningful corporate governance.

Daire Hickey owns 7 per cent of Manders Terrace through his company, Lazvisax. He resigned as a director in 2019 and has brought separate, but related, proceedings alleging shareholder oppression.