My take in summary.
Liability has already been decided as a result of the default judgment. The calculation and proof of damages is the outstanding equation.
First, I have almost no doubt that GDSI will win. Rontan and the individual defendants have essentially conceded the company to GDSI.
Therefore, the real outstanding question mark is the damages. Remember, liability has been established. Damages have not been. The damages will come from 2 outstanding areas given the fact that it is virtually a lock that specific performance is ordered which means hand over the company.
The 2 areas of damages are outstanding tax obligations and real estate liens. Interesting enough, Rontan does not put up much of a fight on the real estate liens in their last filing. They almost concede this.
Their real fight is on the undisclosed taxes. Rontan argues since GDSI knew about the undisclosed taxes before the closing date of the SPA, they waived the conditions precedent and therefore, GDSI is mot entitled to damages on the undisclosed tax obligations (undisclosed at the time SPA was signed). An analogy would be if you contract to sell me a car with an engine and I find out prior to closing that there is a judgment lien against the car but I still insist that we close, am I then eligible to pursue damages equal to the value of the lien. At first glance, it's not a crazy argument. The problem Rontan has is that judges will look at common law and case law. The common law is squarely on GDSI's side. The breach of contract is uncontroverted. However and as I indicated earlier today, the case law is also on GDSI's side. In fact, 2 cases have been cited by GDSI in Florida's Southern District confirming the fact that GDSI is entitled to incidental damages even though GDSI knew about the undisclosed tax obligations prior to closing. Rontan did not dispute GDSI's expert's conclusion on the amount of unpaid taxes. Rontan also did not cite any existing case law which concluded that although GDSI knew about the undisclosed tax obligations, they aren't entitled to damages related to the undisclosed tax obligations. Since judges are not in the business of rewriting the law of their district, GDSI should also receive a damages award close, if not all of what they are asking for.
The net result should be that GDSI gets the company for zero cash as a result of the damages offsetting the payment amounts pursuant to the SPA and should also have well over $100 million in damages after they receive the company.
I believe if anyone does their own homework, they will come to a similar conclusion.
