No wrongdoings on the part of Procuritas in Gram arbitration case
Today an arbitration award was delivered concerning the sale of the former Procuritas portfolio company Gram Equipment A/S to FSN Capital Fund V. A unanimous Arbitral Tribunal dismissed allegations that Procuritas acted fraudulently.
The Arbitral Tribunal, comprising Professor Torsten Iversen, Former President of the Danish Supreme Court Torben Melchior and Professor Mads Bryde Andersen, dismissed all accusations against persons associated with Procuritas. However, the Tribunal found reason to criticise certain circumstances in the target company Gram Equipment A/S, which is why the seller company Green Magnum S.A., was ordered to pay damages in this case. The length of the arbitration award is 429 pages.
Hans Wikse, Partner, Procuritas, is pleased that the tribunal did not place any fault upon Procuritas in terms of having misled FSN, but finds it regrettable that the Arbitral Tribunal has found that gross errors were committed in Gram Equipment A/S. He says that he appreciates the solid legal work of the Arbitral Tribunal, but that it is highly surprising that a seller company is to be held accountable for wrongdoings by Gram employees.
“The arbitration award entails that the seller has been found responsible for shortcomings of individuals in the target company as regards the disclosure of information during the sale process, while at the same time FSN’s claims in media against individuals associated with Procuritas are without any merit. We believe that certain parts of the arbitration award are surprising, for instance the individuals found responsible lacked motive as they jointly invested in the transaction together with FSN.
In 2017 FSN Capital Fund, through KG BidCo ApS, acquired Gram Equipment A/S from Green Magnum S.A., a Procuritas portfolio company. KG BidCo ApS later requested that the Arbitral Tribunal consider whether the seller had been fraudulent or acted with wilful misconduct.
“When sold in 2017, Gram Equipment A/S was a market leader, had a solid growth history and was well positioned for continued expansion. Company management believed completely and fully in the company’s future potential. FSN engaged a large number of advisors and was given every opportunity to perform thorough due diligence. It is regrettable that the Arbitral Tribunal has nevertheless found that such gross errors were committed within the target company,” says Hans Wikse.