Amidst dealing with the new FDI rule and e-commerce draft policy, Flipkart is now facing an $800,000 lawsuit over the acquisition of Upstream Commerce, which was announced in September last year.
The suit has been filed by Wolet Capital Corporation, an investment bank that counts US-India cross border deals as its key area of function. The corporation alleges that Flipkart has made a breach in contract and unjust enrichment and the amount of the lawsuit is a sum of damages and costs borne by the i-bank.
As per the suit, Flipkart requested the investment bank to identify the analytics and AI startup for acquisition purposes and Wolet introduced them to Israeli startup Upstream Commerce. The acquisition originally had been made to help Flipkart deliver real-time competitive pricing and product analytics to the sellers.
For this deal, Wolet Capital had spent months on extensive merger and acquisition research, analysis, and financial advisory work. After this only, the Walmart-controlled marketplace was able to hand over the deal to business and legal functions for the purpose of making a close. Flipkart senior execs had then made an ‘express promise’ to pay the i-bank for the same.
To name these executives, Akash Goyal, Flipkart Corporate Development Group’s senior exec had made the request, and Sankalp Gupta, Senior Director of the same function promised to take care of the payment.
The negotiations accounted Wolet as a service provider in the deal and when it was finalised at around $40 million, the bank expected a payment of $200,000. However, when Wolet went to solicit the payment, Flipkart refused to pay. Even when the i-bank provided evidence of work done in the few months, Flipkart didn’t respond.
Further, when the deal was announced, Avendus Capital was titled as the advisor, and there was no mention of Wolet Capital Corporation.
For Wolet, Walmart by virtue of being Flipkart’s acquirer is also being held accountable for the actions of the company and is obliged to pay.
The suit has been filed in New York Southern District Court and both Flipkart and Walmart have received the summons to which they are yet to respond.
The information about the suit is soured from ET.
