Legal Claim by Evaate LLC States that Portfolio BI, a Portfolio Company of Credit Suisse Next Investors,
Unlawfully Withheld in Excess of $1 Million from Hentsu Founders
NEW YORK, Aug. 22, 2023 /PRNewswire/ — Marko Djukic, founder and former CEO of fast-growing fintech startup Hentsu, Ltd., has filed claims in New York and Delaware against Portfolio BI (PBI), a portfolio company of Credit Suisse NEXT Investors for breach of contract and failure to pay compensation owed to Djukic and other Hentsu founding shareholders related to the acquisition of Hentsu in 2021. UBS Group AG announced that it acquired Credit Suisse in June 2023.
The claims, which exceed $1 million, seek to recover success fees unlawfully withheld and the release of escrow funds due to Hentsu’s earliest investors and employees.
Djukic said, “Even vigilant founders are at risk from unethical investors who violate the principles that should guide relationships between shareholders and builders of high growth startups. Early stakeholders may become targets for powerful corporations to exploit their influence and dictate outcomes that only serve their own interests. This practice is not only an infringement of their fiduciary duties but also builds mistrust, poisons the marketplace and ultimately thwarts innovation.”
Documents filed in the case support Djukic’s position that PBI and Credit Suisse violated their fiduciary duties to Hentsu and its investors and wrongfully withheld compensation due under the negotiated Stock Purchase Agreement.
According to the claim:
“NEXT acquired a 30% financial interest in Hentsu and insisted that it have the right [to] block potential change in control transactions. Hentsu granted these rights with the expectation that NEXT’s interests were aligned with Hentsu to maximize the value of the company.”
“As Hentsu’s business matured, it received and entertained take-over offers. During 2020, two separate offers were made to acquire Hentsu for $25-30 million. Taking advantage of the size and terms of its investment in Hentsu, NEXT forced the rejection of both offers. Later during 2020, NEXT, in order to hide its failings, engineered the acquisition of Hentsu by [PBI for a lower price,] forcing Djukic and Hentsu’s other investors to sell Hentsu for less than its fair value.”
Filings additionally state:
“On information and belief, Credit Suisse invested multiple rounds to keep PBI afloat . . . however, by the end of 2019, Credit Suisse had nothing to show for its investment. Indeed, despite Credit Suisse’s ongoing support, [PBI] had no meaningful product in the market, and its CEO had developed a toxic reputation in the marketplace. Credit Suisse, seeking something to show for its investment in PBI, pushed to have PBI merge with Hentsu through its affiliate NEXT. Hentsu’s founders and other investors objected to having Hentsu merge with PBI. In larger part, because of PBI’s dire business performance and toxic reputation, Hentsu investors wanted a merger with a third party.”
“PBI’s toxic reputation had been developed through derogatory treatment of women, including some of Hentsu’s personnel.”
The filings explain that after the acquisition and integration, NEXT and PBI deliberately breached their agreement:
“After the merger closed, PBI delayed paying various amounts due under the Consulting Agreement, ignored communications from Djukic requesting confirmation that PBI would timely pay the $675,000 consulting fee when that fee became due, and ultimately refused to pay that consulting fee by belatedly asserting that it had not been told the truth about Hentsu. Based on that same belated assertion, PBI also attempted to seize amounts that had been escrowed under the SPA that are due to be paid to Djukic and the sellers of Hentsu.”
“. . . PBI’s senior executives sought to have [a major client’s] personnel create documents that mischaracterized and misrepresented events in 2020 to support PBI’s . . . claims in this matter. In at least one instance, PBI provided the text of document that [the major client] was to send. This was part of PBI’s effort to create a false documentary record to support its baseless refusal to pay Djukic and Sanghrajka what they are owed and refuse to release the funds held in escrow that are due to Djukic and Sanghrajka. Djukic has audio recordings of witnesses explaining this process.”
“Notably, the requests to [the major client] originated from Jeremy Siegel, PBI’s Chief Executive Officer, and Alan Freudenstein, NEXT’s lead partner, including a personal attempt by both to persuade [the major client’s] ex-COO to support the PBI false narrative, which was rebuffed by the [major client’s] ex-COO as lacking any factual basis.”
Djukic founded Hentsu in 2015 to provide technology and related services to the FinTech, alternative investments and investment banking industries. Hentsu provided fully managed AWS, Azure, and Google cloud platform solutions for fund managers. Its service enables trade connectivity, software interface, and support services, including security and compliance. It also offers on-demand applications, computing clusters, and connectivity to market data providers, brokers, and exchanges.
Evaate, LLC, founded by Marko Djukic, is a privately-held company and the plaintiff in the New York litigation, focused on upholding the principles of contract law and the rights of founders in the broader business community.
More information about the litigation can be found at: https://www.portfoliobi-litigation.com/
Evaate LLC vs Portfolio BI, Inc. is filed in New York County Supreme Court and has been assigned Index Number 650125/2022. The Delaware Chancery Court litigation has been assigned case number 2023-2341 with cross complaints between Marko Djukic and Portfolio BI, Inc. Halloran Farkas + Kittila LLP represents Evaate and Djukic in both venues.
SOURCE Evaate, LLC
Originally published at https://www.prnewswire.com/news-releases/founders-and-investors-of-fintech-startup-hentsu-file-litigation-against-portfolio-bi-for-breach-of-acquisition-agreement-301907001.html
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