Wisetek in legal row with shareholders over buyout terms

Irish tech firm says US investors paid €1.39m under agreed terms; they claim they are entitled to more

Wisetek  founder and chief executive Seán Sheehan (second left) with Computer Discouunters president and chief executive Chris Scott (second right) and executive vice-president Zack Boorstein (right) at the time the deal was announced in 2017.

Wisetek founder and chief executive Seán Sheehan (second left) with Computer Discouunters president and chief executive Chris Scott (second right) and executive vice-president Zack Boorstein (right) at the time the deal was announced in 2017.

 

A dispute over the price paid to two shareholders for their stakes in an IT company has been admitted to the fast-track Commercial Court list.

The action has been brought by Zachary Boorstein and Christopher Scott, who are both based in the United States, against Wisetek Solutions Limited, with a registered address in Glanmire, Co Cork.

Wisetek specialises in the recycling and repurposing of used hardware.

The plaintiffs claim that, under the terms of a share purchase agreement entered into with the company four years ago, they are entitled to be paid either $1.65 million (€1.39 million) each or the market value of the 7.5 per cent stakes they each held in the company.

Shareholdings

Wisetek disputes the shareholders’ claims and says the applicants were entitled to be each paid $1.65 million for their respective shareholdings, and that it has paid the plaintiffs accordingly.

The court heard the plaintiffs have not articulated what they say is the market value of their shareholdings in Wisetek.

However, Wisetek, which denies the claims against it, says it assumes the value eventually put on the shares by the plaintiffs will exceed the amount it paid them to acquire their shares.

Rossa Fanning SC, for Wisetek, told the High Court his client was seeking to have the case admitted to the list as the proceedings are commercial in nature. The case came down to an interpretation of a term or clause within the agreement entered into by the parties in 2017.

Acquisition

That arrangement saw the two plaintiffs sell their shareholding in a US company called Computer Discounters Inc to a subsidiary of Wistek, in return for shares in the defendant.

As part of the arrangement, it was further agreed that Wisetek would pay each of the plaintiffs a sum of $1.65 million by October 31st, 2021, in return for their stake in Wisetek.

The two were also kept on as employees of the Wisetek group on salaries of $230,000 a year for a term of three years.

In October 2020, Wisetek informed the plaintiffs that their employment agreements would not be renewed beyond the three-year term. Wisetek claims that, as part of the 2017 arrangement, it paid each of the plaintiffs what it claims was the agreed redemption price of US$1.65m.

The plaintiffs claim that they are entitled to have their shareholding redeemed at a greater value than what they received. They have brought proceedings before both the Irish and US courts.

They also claim their roles when working for Wisetek after they sold their stake in Computer Discounters Inc were not as had been originally envisaged.

The matter came before Mr Justice Denis McDonald, the judge in charge of the big business division of the High Court. The application was not opposed. The judge admitted the case to the Commercial Court list and made the matter returnable to a date in January 2022.