CDC inks tentative settlement of Evolution claim, New York lawsuit

By Caroline Salls

Pittsburgh, Dec. 13 - CDC Corp. requested court approval of a settlement that resolves disputes between the company, its equity committee, the Evolution parties and a defendant in a related lawsuit and a settlement resolving disputes between CDC, the committee and director and officer and other parties, according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Georgia.

In light of the risks, cost, and delays associated with the disputes between the parties in connection with a Supreme Court of the State of New York lawsuit and an Evolution Capital Management, LLC claim, CDC said the parties have reached tentative agreements to settle all asserted and potential claims arising from the disputes.

CDC filed a complaint in August alleging breaches of a settlement agreement and challenging the Evolution claim, and the committee filed an intervenor complaint against the Evolution parties on Nov. 6.

As previously reported, CDC has established two separate reserves, including a $32.5 million Evolution Capital Management reserve for any payments to be made on an Evolution claim and related indemnity claims and a $10 million litigation expense reserve to satisfy any obligations from a New York lawsuit.

The company said it had paid a total of $862,729 to counsel for New York defendants as of Oct. 31, leaving a $9.14 million reserve balance.

Under the proposed settlements:

• The company will pay $7.8 million to the Evolution parties and CDC Software will pay CDC $400,000;

• All Parties will mutually release each other from all claims related to the New York lawsuit;

• The New York lawsuit and CDC's adversary proceeding will be dismissed, with prejudice;

• Evolution Capital Management will withdraw its proof of claim; and

• Sums reserved for the Evolution claims and indemnified litigation costs will be released.

CDC, a Hong Kong- and Atlanta-based enterprise software and new media company, filed for bankruptcy on Oct. 4, 2011. Its Chapter 11 case number is 11-79079.

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