2 SeD subsidiaries in legal proceedings against vendor

TWO subsidiaries of Catalist-listed Singapore eDevelopment (SeD) have commenced legal proceedings against a vendor - which has also begun legal proceedings against them - in the San Diego County Superior Court in California.

SeD units iGalen International and iGalen have filed a complaint against Gara Group and its founder Kosta Gara for breach of contract, breach of covenant of good faith and fair dealing, and intentional interference with economic relations. This was officially served on Gara Group on Nov 7.

iGalen had contracted with Gara Group for services including product fulfilment, software development and social media management. Between March 2017 and August 2018, iGalen paid Gara Group over US$2.3 million.

In September 2019, Mr Gara alleged that certain invoices were outstanding and overdue, and Gara Group unilaterally suspended or terminated all services.

SeD said that Mr Gara "also attempted to further pressure iGalen by threatening to disseminate misrepresentations to iGalen's distributors with the false statement that 'they are not being paid commission on account of iGalen's inability to pay its vendors'".

"The company wishes to reassure shareholders that iGalen has paid and is continuing to pay all its suppliers and distributors. In fact, chargebacks and returns on iGalen's network have been very low as iGalen's suppliers, distributors and customers believe in its products, founders and management," said SeD.

On Oct 10, Gara Group itself begun legal proceedings against iGalen International, iGalen and certain officers of iGalen and SeD. Gara Group's complaint was for breach of contract, breach of covenant of good faith and fair dealing, quantum meruit (reasonable value of services) for work and labour furnished, intentional misrepresentation, negligent misrepresentation, open book account, intentional interference with prospective economic advantage, alter ego liability, and accounting. Its claims are for, among other things, general damages, special damages and liquidated damages.

The defendants have appointed legal counsel, sought legal advice, responded to the complaint, and are seeking a dismissal of it. A court hearing has been fixed on Jan 8.

SeD shares closed down 0.3 Singapore cent or 6.98 per cent to four Singapore cents on Wednesday before the announcement.