CDC alleges Evolution settlement breach, objects to lawsuit claims

By Caroline Salls

Pittsburgh, Aug. 31 - CDC Corp. filed a complaint Friday against Evolution Capital Management, LLC and four other Evolution entities for alleged breach of a settlement, according to a filing with the U.S. Bankruptcy Court for the Northern District of Georgia.

CDC is also objecting to related claims filed by the Evolution entities.

On April 11, CDC received court approval of a settlement that gives the Evolution funds a $65.36 million allowed claim in CDC's bankruptcy case, plus post-judgment interest accruing until the date of payment. A $2.1 million discount will be applied to the payment if it is made before Oct. 31.

CDC said it paid $71.41 million to the Evolution funds on April 12 in satisfaction of the allowed claim.

In exchange for the claim, the company said the Evolution funds agreed not to file any causes of action against CDC, except for a cause of action to enforce the settlement, and not to file any proofs of claim in CDC's bankruptcy case, except a proof of claim limited to the Evolution judgment.

However, CDC said Evolution Capital Management and the Evolution funds filed a lawsuit on April 27 against former employees, officers and/or directors of CDC, as well as CDC Software Corp. and Asia Pacific Online Ltd.

Each of the defendants named in the Evolution lawsuit has asserted a claim or demand against CDC for indemnification of any losses related to the suit, the CDC complaint said.

Evolution damages claim

CDC said Evolution Capital Management has asserted a claim for a minimum of $12.5 million, plus exemplary or punitive damages, based on allegations of tortious interference with prospective business relations, malicious prosecution and libel.

The company said the same claims for damages have also been asserted against all of the defendants named in the Evolution lawsuit.

Because of the indemnification claims, CDC said it could be ultimately responsible for the payment of damages arising from the Evolution lawsuit.

According to the CDC complaint, the company denies that the alleged damages were caused by the conduct of its employees, officers and directors.

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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