In Commercial Court proceedings, publicly-listed Teqnion AB is claiming more than €8.2m from Sunward Holdings Ltd, the new name for Reward, and two of its directors Kevin Ward and Thomas Ward, both of Killery House, Upper Dargle Road, Bray, Co Wicklow.
The case was admitted to the fast track commercial list on Monday by Mr Justice Mark Sanfey on the application of James Doherty SC, for Teqnion..
There was no opposition to the admission application by Martin Hayden SC, for the Wards, but the court heard they deny the allegations.
The judge adopted agreed directions for the progress of the case and put it back to next March. He said he trusted the parties will liaise and hopefully there will be mediation.
Teqnion has 38 operating companies in Europe. It claims that it was approached in January 2021 by sell-side advisors Corporate Finance Europe about acquiring Reward.
Teqnion director Daniel Zhang said in an affidavit that, following due diligence, a share purchase agreement was entered into with Sunward, with the two Ward directors as guarantors and Anne Ward and John Ward as beneficial owners. Teqnion paid an initial €5.2m to Sunward together with an initial earn out of €3m.
A dispute arose over the payment of a second earn-out amount and in the course of a review Teqnion discovered certain financial irregularities that gave rise for concern, Mr Zhang said.
On foot of allegations of financial irregularities, failure to property notify the board of customer complaints, failure to follow instructions from the board and failure to provide information to auditors, Kevin Ward was suspended as CEO and Thomas was removed as director.
Separate proceedings were then brought after access to Reward’s IT system was suspended for all employees without the authority of Reward. A hearing of that matter is pending.
Joint provisional liquidators were appointed to Reward on October 8.
Mr Zhang said given the serious consequences posed to the business by being unable to access its own IT system, a forensic IT team was brought in and access was regained.
Following partial recovery of deleted documents and, following investigation, significant concerns were identified in relation to the certification of products sold by Reward.
The agreement for Teqnion to acquire Reward provided products had complied with all applicable regulations, no fact or circumstance would be likely to give rise to a legal claim against Reward, and that necessary licences, permits, authorisations and consents had not been breached.
Mr Zhang said a majority of the food trailers sold by Reward were not certified as roadworthy. It was now evident Reward and its officers concealed the true certification status before the deal, he said.
A forensic accountant’s investigation of Reward showed material facts in relation to the financial position of Reward since 2020 were not disclosed, he said.
Had Teqnion been aware of the true financial position it would never had acquired the company, he said.
Teqnion seeks orders including for the rescission of the share purchase acquisition agreement, restitution of the amounts by which the defendants have allegedly been unjustly enriched and damages.