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Law360 (April 2, 2020, 4:00 PM EDT) -- Conduent Business Services LLC is asking the Delaware Chancery Court to enforce a looming deadline connected to its business deal with a private equity firm, arguing that the firm is using stall tactics, including pending litigation upended by COVID-19, to escape more than $18 million in obligations.
Conduent could lose out on the cash if Skyview Capital LLC doesn't assume operations of a Jamaica call center it purchased from Conduent 14 months ago by April 30, but Skyview is now haggling over the transfer terms and has launched pretextual contract breach claims in New York state court in a "clear attempt to avoid its obligation," Conduent says in its complaint filed Wednesday.
The agreement requires Skyview to reimburse Conduent for running the call center — a task Conduent says has cost over $18 million so far — for the 14 months since the sale closed, and states that the deal is canceled if the April 30 deadline is missed, according to the complaint.
The need for a Delaware court judgment outlining the rights and obligations of the asset purchase agreement with Skyview is "urgent" since New York courts are shuttered and Skyview's lawsuit is suspended indefinitely due to the coronavirus pandemic, Conduent's complaint says.
"Therefore, with no other options, Conduent is seeking this court's aid for the limited purpose of deciding this breach of contract and declaratory judgment action so that the parties may move forward with the Jamaica deferred transfer and assess any damages at a later date when New York courts are operational," the complaint said.
The dispute between Conduent and Skyview is rooted in their $25 million deal for Skyview to buy certain call centers from Conduent, according to the complaint. The deal closed in February 2019, but "outstanding legal, regulatory, and operational issues" delayed the transfer to Skyview of call centers in India, the Philippines and Jamaica, the complaint says.
The deal included a "deferred transfer" provision in which Conduent would continue operating the call centers until the issues were resolved, and then Skyview would reimburse Conduent for the operational costs within 10 days of the completed transfers, the complaint says. The transfers were subject to a 15-month deadline, according to the suit.
The transfers of the India and Philippines call centers were completed in March and June 2019, respectively, but regulatory issues delayed the Jamaica call center transfer, according to Conduent.
Conduent claims it has already taken multiple steps to address the issues, which mainly involve compliance with the Jamaican government's new Special Economic Zone regime governing trade and business within specific geographic areas.
As the 15-month deadline drew near, Conduent claims, the company began locking horns with Skyview about the transition services terms in the purchase deal. On Feb. 3, Skyview filed a lawsuit in New York Supreme Court asserting fraud and breach claims against Conduent related to the deal.
Conduent claims the parties continued to squabble over terms of the Jamaica call center's transfer, saying Skyview is trying to impose "additional extensive burdens" on Conduent with respect to the delayed transfer agreement.
The parties traded communications throughout March in which Skyview accused Conduent of failing to provide a new transition services agreement, although Skyview had rejected the version Conduent had proposed, Conduent claims.
Skyview also wrongfully accused Conduent of failing to complete required restructuring transactions for the deal in a timely fashion, despite knowing of the regulatory obstacles Conduent had faced but ultimately resolved, according to Conduent.
Skyview outlined demands in a "final response" March 25 that didn't acknowledge its own obligations, according to Conduent. Skyview is "unilaterally impeding" the timely transfer of the Jamaica call center, while Conduent is "ready, willing, and able to complete" the transfer, the complaint said.
Conduent says it had been preparing to fight Skyview's lawsuit — which Conduent described as "manufactured claims" alleging Conduent made misrepresentations prior to the agreement — in New York before Chief Administrative Judge Lawrence Marks suspended filings March 22.
Skyview's "persistent dilatory tactics to deprive Conduent of its bargained-for rights under the [asset purchase agreement] is depleting Conduent's financial and operational resources to the point of threatening the viability of Conduent's business," the complaint said.
Conduent is represented by Rena Andoh, Robert S. Friedman and Kate Ross of Sheppard Mullin Richter & Hampton LLP and C. Barr Flinn, Emily V. Burton and Peter Artese of Young Conaway Stargatt & Taylor LLP.
Counsel information for Skyview was not immediately available.
The case is Conduent Business Services LLC v. Skyview Capital LLC, case no. 2020-0232-JTL, in the Court of Chancery in the State of Delaware.
--Editing by Abbie Sarfo.
For a reprint of this article, please contact reprints@law360.com.
