C4V calls for Magnis to lose court fight after shock battery factory manoeuvre
As the clock ticks down on the financial survival of Magnis’ battery gigafactory, a key partner has upped the ante in the ongoing legal battle.
The key technology partner for Magnis Energy Technologies, has called for a court to find in its favour after accusing the ASX-listed battery and graphite player of stringing along an urgent court process and disingenuously seeking to resolve their dispute by resigning from the board of their joint venture.
This comes as the clock ticks down on the finances of Magnis’ battery gigafactory Imperium3 NY, which allegedly has funds to survive until January 15.
Court documents filed in the Delaware Chancery court reveal Charge CCCV, which has licensed its technology to Magnis for exclusive use in North America and which owns a stake in iM3NY, has rushed to court in a bid to force a summary judgement in its favour.
C4V claims Magnis has refused to hand over documents ahead of a court fight between the two on January 2.
However, C4V claims Magnis only told the battery technology company it would not cooperate after it had received their evidence.
Emails presented to the courts show Magnis’ lawyer Tom Warns, from corporate law firm K&L Gates, told C4V the ASX-listed company had “no need to engage in additional discovery” after filing a letter to the court revealing its directors would remove themselves from the board of iM3NY’s holding company.
“In full disclosure to prevent unnecessary labour, we want you to know we will not be serving discovery responses tonight or scheduling depositions,” Mr Warns said.
This came after a flurry of emails back and forth between the two sides as C4V attempted to pin down Magnis’ directors Frank Poullas, Claire Bibby, Giles Gunesekera, and Mona Dajani for legal examinations ahead of the January 2 trial.
C4V had made several attempts to examine the directors, with Ms Dajani’s travel to Antarctica one of several frustrations to the process.
The two sides were required to complete handover of documents on December 20 ahead of their court showdown, after C4V took action against Magnis claiming the company had illegally seized control of their joint venture iM3NY in a boardroom coup after muting the microphones of its directors in a video call.
Magnis denies this.
But Magnis’ lawyer Steven Caponi wrote to C4V on December 19, revealing Mr Poullas, Ms Bibby, and Mr Gunesekera “intend to resign their positions on the Board of Nominal Party IM3NY LLC (“IM3NY”) in order to resolve this dispute”, removing the need for the case to progress.
“The Magnis directors are taking this action so that they can continue working unimpeded with a potential investor that is poised to invest the capital needed to extinguish the debt held by IM3NY’s secured lender,” Mr Caponi said.
iM3NY’s lenders, Atlas Credit Partners, seized control of the battery factory on November 29 after finding eight breaches of a $100m loan agreement.
Atlas Credit Partners removed Magnis’ directors from iM3NY, leaving only C4V boss Shailesh Upreti, alongside two of their representatives.
Magnis was suspended from trading after The Australian revealed the company had lost control of its key asset, with the company only acknowledging the loss to the market on December 18.
“Magnis, in other words, is agreeing to stand down, and to refrain from exercising any Board rights it has with respect to iM3NY for the next three and a half months,” Mr Caponi said.
“There will be no live dispute for this Court to resolve following the resignations of Bibby and Gunesekera, as C4V will control the IM3NY Board.”
Mr Caponi said Magnis was “compelled by the fact that it cannot both engage in all-consuming litigation between now and January 2, 2024, and continue to negotiate with the board of Imperium3 and an investor poised to provide the liquidity needed to retire the
secured debt”.
“Magnis and its investors are working directly with the two independent Imperium3 directors appointed by the lender to execute NDAs and to establish the data room necessary for due diligence. They are also working with counsel for the secured lender,” he said.
Magnis took this move after agreeing to a status quo agreement with C4V, which agreed to make no decisions about iM3NY without unanimous board approval.
C4V pushed back on Magnis’ claims, warning in a notice to the court the company was attempting to “impose impossible conditions on their capitulation, asking the Court to allow them to challenge any financing that will save iM3NY LLC (“iM3”), but which Magnis deems against its self-interests, based on a draft version of the Company’s LLC Agreement that never took effect”.
Lawyers for C4V claimed Magnis’ legal team, when filing the notice revealing the directors would step off the iM3NY board, did not disclose to the court they would stop cooperating on the case before the courts.
“C4V has worked tirelessly, and expended significant time and money, to satisfy its discovery obligations,” they said.
“This includes making three rolling productions to Defendants, with Defendants having the audacity to review Plaintiff’s document production mere hours before telling the Court this case is moot, and telling C4V that they would not participate in discovery.”
C4V called for the court to make a default judgement in its favour “given the egregiousness of Defendants’ conduct”.
“Anything less will communicate to like-minded parties that they can resort to this sort of self-help with impunity,” they said.
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