ASX-listed IT investment company, Invigor Group (ASX:IVO), will take legal action against US-based video management software provider, KIT Digital, which placed its Australian arm into administration.
PPB Advisory was appointed as the administrator on December 21. KIT’s subsidiaries Idapative and Hyro Digital have also been placed into administration.
Administrators were appointed not long after KIT was delisted from the Nasdaq and dismissed Grant Thornton as its independent auditor.
Hyro Digital was sold to KIT in June last year for $2 million in cash and 1.84 million in shares. After the sale to KIT, Gary Cohen’s Marcel Equity Group injected $1.24 million into Hyro and he became the company’s chairman. In October, Hyro was renamed as Invigor Group.
Cohen opposed Hyro’s sale to KIT and was lobbying investors not to accept the offer.
According to a statement on the ASX, Invigor is launching legal action in the US for $15.2 million for unspecified damages for misrepresentation and breaches of contract with regard to the Share Purchase Agreement (SPA).
“KIT has previously announced its accounts were not accurate at the time it entered into the SPA and that it’s replacing its auditor. KIT has also not completed on the top-up mechanism process contained in the SPA,” the statement said.
According to a report KIT Digital was experiencing financial difficulties and about 90 jobs will go. The amount owed to creditors hasn’t been disclosed at this stage.