A company is suing two directors of a business they acquired claiming there was a failure to disclose before the sale that one of the biggest customers of the business would be terminating its contract.
Principal Systems (Holdings) Ltd is suing John Brennan and Mark Greene, along with two of their companies, alleging misrepresentation and negligent misstatement over the 2020 share purchase agreement.
The Commercial Court heard the share purchase was worth €5.5 million and that Principal (Holdings) is claiming just over €1 million in losses in its action.
The case is against Mr Brennan, of Campbell Court, Cairns Hill, Sligo, and his company Ithania Investments Ltd, which together got nearly 66 per cent of the €5.5 million. The other defendants, Mr Greene of Willbrook Lawn, Rathfarnham, Dublin, and his company Yranna Investments Ltd, hold just under 24 per cent.
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Mr Brennan and Mr Greene are former directors of PLT Data Systems Ltd and of Principal Distributions Systems Ltd, the companies sold in the December 2020 share sale. Mr Brennan was the founder and Mr Greene the financial director.
Terminated contract
Brian Connolly, a director and accountant of Principal (Holdings), said in an affidavit that, under the share sale, the defendants warranted to Principal (Holdings) that no customer of the business had advised that it would be terminating any contracts. However, Testerworld Ltd, one of the largest customers of the business providing a software licence and management agreement, had advised it would be terminating its contract in the weeks before the share purchase agreement was completed, Mr Connolly said.
In a replying affidavit, Mr Brennan, on behalf of all the defendants, disputed the amount claimed by Principal in its action and said it did not meet the €1 million threshold for allowing the case into the fast-track commercial list.
Mr Justice Denis McDonald admitted the case to the list. He said he had to approach the application for admission to the list on the basis of whether there was a credible contention that the value of the case met the threshold.
The underlying transaction was very much a commercial matter, he said. Admission to the commercial list did not deprive the parties of moving to mediation or some other form of dispute resolution.
The case comes back in November.
