Background
A Thai supplier has delivered electronic components for high-performance 3D printers in unusable condition. 50% of the purchase price, totaling € 370 million, was paid in advance. Without justification the supplier refuses to provide a replacement delivery, or a refund of the deposit. The client, supported by a British litigation financier, turned to a ‘Magic Circle’ law firm with experience in the enforcement of claims in arbitration proceedings.
Unsurprisingly, after just a few months of negotiations, the arbitration tribunal sentenced the Thai supplier to pay €190 million and a further €10 million in court and legal fees. The judgment was immediate and enforceable worldwide. The Thai supplier refused to pay, and threatened insolvency.
The law firm quickly saw a problem; the case was successful, however the client would receive no money! The money was not only urgently needed in the company itself. The British litigation financier had also planned on the basis of successful arbitration proceedings, and was pushing for a quick solution.
Task
REMARKABLE Investigations was commissioned by the law firm supporting the plaintiff to identify all the assets of the supplier, and its parent company worldwide. In addition, asset shifts during the last two years were to be documented, as there had been unconfirmed indications of restructuring in the supplier’s organisation since the beginning of the legal dispute.
Findings
REMARKABLE Investigations noted that the owner of the Thai supplier had been systematically withdrawing funds from the business. All assets such as real estate, company buildings, production facilities and know-how were sold to foreign companies owned by family members of the company owner, via a complicated network of companies, or transferred by way of transfer of funds. The supplier was thus practically without assets. Legally, a procedure against the parent company had little chance of success.
Through confidential sources, and discreet investigations in the immediate environs of the supplier, REMARKABLE Investigations uncovered a supposedly insignificant sales subsidiary owned by the supplier. The company officially had only two employees. The company's assets were unidentifiable, but were considered insignificant. However, there were a few, credible indications that the subsidiary had considerable outstanding receivables. The financial figures of the sales subsidiary were not publicly available because they were consolidated in the annual financial statements of the parent company, and were not explicitly assigned to it there. Further investigations showed that these outstanding receivables were probably due from customers, some of whom were granted payment terms of up to one year.
In the course of further inquiries, REMARKABLE Investigations identified approximately 10 key customers worldwide with outstanding liabilities in unknown individual amounts. These customers were confronted with the enforcement order by the law firm of the 3D printer manufacturer, and were requested to settle their accounts against the open liability, not to the subsidiary of the supplier, but to the account of the title holder.
Results
In order to avoid public prosecution, investigations into the transfer of assets, and to protect the relationship with its customers, the parent company of the Thai supplier ultimately paid the total amount of € 200 million to the plaintiff.