VC firms file claim against VisionChina for at least $60m

Under the merger agreement, VisionChina agreed to pay the venture capital firms $160 million for DMG in January 2010 through an immediate transfer of $100 million in cash and stock, and two subsequent payments of $30 million each. The two payments, the second of which was due November 16, have not arrived.

Last Friday, a VisionChina director was personally served with an order of attachment against VisionChina and a related entity for "no less than $30 million," following a ruling by the New York State Supreme Court.

In its subsequent motion, filed to the same court, Oak and Gobi argue that there are no disputed facts as to whether the merger agreement exists or whether VisionChina owes two installments of $30 million. "VisionChina has already enjoyed the benefits of the merger agreement, having had control of DMG for over a year. Its only putative defenses to enforcement of the payment provisions were its baseless fraud allegations which have now been dismissed as a matter of law," the motion states.

The venture capital firms further accuse VisionChina of embarking on "a strategy to avoid paying for the acquisition at all," which involved filing a complaint against Oak and Gobi in December 2010, asserting claims of fraud, breach of contract, unjust enrichment and declaratory relief.

VisionChina's argument was that DGM's investors had acted in poor faith. Following the merger with DGM in 2010, the company's stock price suffered, including a single-day drop of 37%. VisionChina tried to re-negotiate the terms of the anniversary payments, but was turned down because the deal was brokered nearly a year earlier.

These claims were dismissed by the New York State Supreme Court on November 3. VisionChina's only remaining claim and counterclaim concerns a breach of contract/indemnity for $2.78 million.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Technology
• Exits
• China
• Gobi Partners
• Oak Investment Partners
• TMT
• Exit
• Venture