Callidus Capital Corporation can safely mark this week as a successful one, as it won the battle in court that Bluberi Gaming Technologies file in towards the end of 2018. Gerald Duhamel was the Chief Executive Officer of Bluberi Gaming up until 2015 and he accused the private equity firm in predatory lending tendencies that eventually led to the bankruptcy of the gaming company. Quebec Court of Appeal dismissed the CA$228-million lawsuit, but more legal action could be on the way.
December 2018 saw the filing of a lawsuit against the Toronto-based lending company that supposedly led Bluberi to its current insolvency. Bluberi Gaming filed for bankruptcy and this lawsuit was part of the case, but unfortunately for Mr. Duhamel, the ruling was against his company. Callidus was about to vote and move on with its previously announced plan for action that included the acquisition of Bluberi’s assets following the insolvency.
Gaming Company Accuses Callidus in Predatory Tendencies
According to the allegations filed by the former CEO of Bluberi, Callidus employed specific tactics and actions that led to the eventual insolvency of the gaming company. Appeals Court Justice Mark Schrager ruled that the previously agreed litigation funding reaching CA$20 million would have to be subjected to a vote by the creditor group of Bluberi. The legal battle has been in progress for a couple of months but it dates back to 2012.
It all started when Callidus purchased Bluberi’s assets and promised financial support in its future operation. Both parties, considering the collaboration a move in the right direction, envisioned expansion. Prior to the purchase, Bluberi was known as a gaming software provider. The ultimate goal was for it to step up its game and sell gaming devices to casino venues across North and South America. Tribal gaming was also among the goals of the gaming company considering it a successful move.
What Bluberi needed at that pivotal point of the development was a loan reaching CA$18.5 million that Callidus offered. However, Mr. Duhamel pointed out in his lawsuit that soon after the loan was received, Callidus started implementing changes to the borrowing conditions. Changes were made to the already discussed agreement which eventually brought a surge in the interest rates. Eventually, this made it difficult for the company to continue with its timely payments.
Other Companies Have Had Similar Experience
Mr. Duhamel claimed in his lawsuit that following the loan arrangement in 2012 Callidus prevented Bluberi from accessing the borrowed funds. None of the claims alleged by him was proven in court up until now. For the time being Ari Sorek, Mr. Duhamel’s lawyer has not issued more details on whether or not his client is going to take matters to the Supreme Court.
What should be pointed out in this situation is that this is not the first case against Callidus implying that the company purposefully makes it difficult for its customers to pay back their loans. Alken Basin Drilling Ltd. is the name of another company managed by Kevin Baumann who bagged a CA$28.5-million credit facility in 2014. He filed a lawsuit claiming that the same predatory practices were employed in relation to his company. The year 2016 saw the company go into receivership.
