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RCS & RDS, called in front of Vienna Arbitral Centre by the former Czech subsidiary. Claims amount to EUR 4.5 M

In March 2018, Yolt Services, the former Czech subsidiary of RCS&RDS, filed against the Romanian company a claim for indemnification in front of the Vienna International Arbitral Centre (VIAC), the the parent company Digi Communications announced in the financial report for the three month period.

“The claimant grounds its request on the sale purchase agreement (SPA) concluded between RCS&RDS and Lufusions s.r.o., a subsidiary of Lama Energy Group Czech-based holding, whereby RCS&RDS sold in April 2015 to Lufusions s.r.o. its wholly owned subsidiary in the Czech Republic,” the document reads.

As an accessory to the business it had sold to the Lama Energy Group, RCS&RDS as seller accepted to indemnify Lufusions, as buyer, for certain types of claims (such as tax, copyright) related to the past activity of the sold company, under certain conditions provided under the SPA.

After completing the sale, RCS&RDS conducted in good faith the claims against the former Czech subsidiary, aiming to obtain the dismissal and/or the mitigation of such claims. However, under the control of the new owner, the sold company suffered several corporate changes (including chain de-mergers) that finally resulted in the sold company no longer operating the business sold by RCS&RDS through the SPA.

Later, the sold company (which had meanwhile become a shell entity) was renamed to Yolt Services. In RCS&RDS’s view, all these post-closing changes have severely impaired the scope of the indemnity provided under the SPA.

In its claim in front of the VIAC, Yolt Services requests RCS&RDS to pay approximately EUR 4.5 million together with the accrued default interest as indemnity under the SPA for tax and copyright claims (the latter in favor of a Czech collective rights management body), as well as indemnity for breach of the seller’s warranties and for other losses.

”We deem that the claimant lacks legal standing, and these claims as ungrounded and abusive, while some of them are either statute barred or do not meet the conditions for indemnification under the SPA. We have also filed in front of the VIAC a counterclaim against the claimant for unpaid amounts for services provided by RCS&RDS to the sold company post-closing, in approximate outstanding unpaid amount of EUR 1 million together with accrued default interest, as well as for other amounts due to RCS&RDS under the SPA,” the report shows.

RCS&RDS has appointed its arbitrator and has submitted to the VIAC its arguments in defense and will continue to defend its position against Yolt Services. The procedure in front of the VIAC is currently in a preliminary phase, the telecom operator points out.

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