| Cause of Action: | IMF funded proceedings brought by the liquidators of Ezishop.Net Ltd (in liquidation) against a number of investors in the company.
Ezishop carried on business as a retailer of consumer goods via the internet and television infomercials. Its plans to undertake an initial public offering were severely affected by the so-called 'tech wreck' in April 2000. By August 2000 the company was in need of further capital.
In August 2000 various investors (most of them existing shareholders in the company) agreed to inject a further $2 million into the company, some by way of loans, but mostly by way of subscriptions for further shares. A Share Subscription Agreement was executed by the company and the investors. The Agreement provided for the subscriptions for further shares to be made in stages over a period of approximately eight months.
Shortly after the Agreement was executed, the company's fortunes took a turn for the worse, following which the company requested certain investors to accelerate their payments under the Agreement. When some investors declined to do so, the directors of the company had no alternative but to appoint administrators, and subsequently liquidators, to the company.
With the assistance of funding provided by IMF, the liquidators commenced proceedings against the investors, seeking to enforce payment of the subscriptions due under the Agreement was 'frustrated' and 'repudiated' by the company by reason of the appointment of the administrators/liquidators, and the inability of the administrators/liquidators to issue shares in accordance with the Agreement. |
