Car dealer Brandon Orlandini claims he is owed extra earn-out fees of $5.4 million, alleging Turners mis-managed Buy Right Cars after it took over.
Through eighteen years work, Mr Orlandini built up Buy Right Cars, importing and selling cars ex-Japan. In 2016, Turners Automotive Group Ltd paid Mr Orlandini $31.18 million for Buy Right: $9.18 million in cash and Turners’ shares plus $22 million for inventory. Part of the sale price was withheld, to be paid at the end of the next two financial years if sale targets were met. Mr Orlandini was to remain in control of Buy Right during the earn-out period.
The High Court was told Mr Orlandini was paid $3.41 million for the first earn-out period. Before the first earn-out period ended, Mr Orlandini agreed to give up day-to-day control of Buy Right, receiving a lump sum payment of one million dollars for the second earn-out period. He later alleged a further $5.4 million was due. Making a ‘fundamental change’ to Buy Right’s business model triggered a clause in the sale agreement making total earn-out fees payable regardless of whether specified sale targets were met, he said.
In particular, Mr Orlandini alleges changing car yard signage from Buy Right to Turners and increasing ex-New Zealand used car sales as a proportion of all sales amounted to a ‘fundamental change.’ The value of Buy Right’s business was adversely affected, he said. Turners denies it took any action adversely affecting business during the earn-out period. In turn, Turners is suing Mr Orlandini for $500,000 alleging he was overpaid for the first earn-out period. A High Court hearing is set down for next year. In the interim, Mr Orlandini asked for court orders giving him access to Turners’ business records, as a precursor to getting a freezing order over Buy Right Cars’ assets. Allegations of a fall in the value of business assets do not justify access, Justice Hinton ruled. Turners says Buy Right is to be amalgamated into Turners’ main business. If successful, Mr Orlandini can be paid out of Turners’ assets, it says.
Turnover Ltd v. Buy Right Cars (2016) Ltd – High Court (1.08.19)
19.144