MOSCOW, January 21 (RAPSI) - A case brought before a US federal court by Renova Industries Ltd. (Renova), a Bahamas corporation within Russia’s Renova Group, against New York Motors Corp. (NYMC) and Alexander Varshavsky, its CEO and beneficial owner, has been dismissed according to court documents obtained by RAPSI.
A document filed on Wednesday and signed by both parties states that in accordance with a settlement agreement between Renova, NYMC, and Varshavsky, “the parties to this action… hereby notify the Court that this entire action, including all claims against all Defendants, has been dismissed with prejudice pursuant to the stipulation of the Parties, with each party to bear its own costs and attorneys’ fees.”
The initial complaint, filed by Renova, alleged that in August 2011 Varshavsky contacted Renova Group founder and Russian entrepreneur Viktor Vekselberg, requesting that the latter assist in arranging for the purchase of ten percent of the shares in a Cyprus-based holding company called Starwhite Ltd. Varshavsky claimed to have been representing the interests of NYMC in his request as well, according to the complaint.
On behalf of Renova, Vekselberg then negotiated and entered into an oral agreement with Varshavsky and NYMC under the terms of which Renova would purchase ten percent of Starwhite shares for $20 million, which Varshavsky and NYMC would then purchase with ten percent interest on the purchase price compounded annually as of the last day of each calendar year between Renova’s purchase date and the defendants’ buy-out date, which was to be no later than the end of 2013.
A Renova affiliate company then made the purchase from a Starwhite minority shareholder at the direction of Renova, which had issued the command based on its expectation of interest gains. As explained in the complaint, “[Renova] would not have entered into the Oral Agreement or purchased the Starwhite Shares absent the promise of compensation.”
After the purchase, Renova claims to have submitted a draft option agreement to Varshavsky and NYMC providing both sides with implementation mechanisms. The option agreement stipulated a 10 percent annual interest rate on the payment, which would accrue from the Renova affiliate’s purchase date, according to the complaint.
Varshavsky and NYMC allegedly refused to sign unless Renova would agree to lower the interest to five percent, and start the accrual from the end of the year of purchase.
Varshavsky and NYMC then submitted a term sheet to Renova admitting the fact that an oral contract had been formed, but stipulating a five percent interest rate, according to the complaint. Varshavsky and NYMC then allegedly submitted an edited option agreement reflecting the five percent interest rate and later accrual date.
Renova agreed to amend the oral agreement accordingly, in an effort to avoid legal proceedings. Varshavsky and NYMC then apparently refused to sign their own edited option agreement, according to the complaint, which added: “In other words, Defendants now refused to pay [Renova] any interest whatsoever.”
Renova then sold the Starwhite shares to a Cyprus corporation controlled by the defendants at the $20 million price agreed upon in the oral contract, thus – according to the complaint – satisfying its obligations under the oral contract.
On May 31 of this year, Renova sued Varshavsky and NYMC for breach of the oral contract, breach of the amended agreement, breach of the implied covenant of good faith and fair dealing in connection with both the oral contract and the amended agreement, quantum meruit, unjust enrichment, promissory estoppel, and fraud.
In July, Renova filed a motion requesting the entry of default against Varshavsky and NYMC for failure to plead or defend itself in a timely fashion.