Tuesday, January 8, 2008
L60, the sole shareholder of Valadata, entered a merger agreement with Quincy, Mass.-based Pipeline on July 10, 2006, in which Pipeline was to purchase Valadata and merge it with its wholly owned subsidiary Valadata Inc.
Pipeline agreed to pay L60 roughly $7 million in three installments: an initial amount of approximately $5.4 million at closing and then two subsequent installments – each in the amount of $782,631 – to be paid upon the first and second anniversaries of the closing date.
L60 claimed Pipeline paid the initial installment, but failed to pay the second portion when due. According to the complaint filed in September 2007, L60 received a letter from Pipeline in August of that year stating Pipeline was no longer obligated to pay L60 further installments.
L60 is seeking the combined amount of the second and third installments it allegedly is owed – over $1.5 million – as well as interest accumulated on the unpaid amount after July 10, 2007.
Furthermore, as a result of the alleged breach of contract, L60 believes it is entitled to reclaim possession of the approximately 8,000 retail merchant accounts owned by Valadata at the time of the merger.
L60 also stated in the complaint that, in the 2006 merger agreement, Pipeline agreed to remit to L60 75% of the revenue received from two account portfolios after Pipeline had serviced those accounts for one year. L60 alleged Pipeline has not remitted that revenue.
The legal proceedings are currently in the discovery phase.
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