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Monday, March 08, 2010

Nukote Sues Clover for Interference, Unfair Business Practices

NuKote vs. Colover Logos Nukote has filed a $100-million lawsuit against Clover Technologies alleging its unfair business practices cost it its Office Depot contracts, thereby forcing it to file for bankruptcy. The complaint sets forth a host of alleged unsavory activity from monopolistic scheming to raiding of employees by Clover. And although Nukote has emerged from bankruptcy, it remains threatened by Clover. In its complaint, Nukote states, “Even today, as Nukote works diligently to regain its place in the market, Clover continues to grind down Nukote under the heel of its market power.”

Clover responded with equally strong language in defense of its actions. In its press release, Clover stated “it is abundantly clear that once again, Nukote is abusing the court system in a transparent and desperate effort to raise capital for a business that is on the verge of collapse.”

In September, Nukote sued Office Depot for breach of contract. That lawsuit also alleges illegal and unethical behavior by Office Depot that includes SEC reporting violations and underpayment of sums due to Nukote so draconian that it “brought the Debtor (Nukote) to its knees.”

In that case, the complaint lays the blame for Nukote’s June 2009 Chapter-11 filing on Office Depot. The complaint also alleges that Office Depot’s activities were partially motivated by its own financial problems.

In May, Nukote and Office Depot ended their 20-year business relationship, in which Nukote supplied Office Depot with as much as $85 million in product annually.Those contracts were subsequently awarded to Clover Technologies.

In June, the decimated Nukote filed for bankruptcy protection. In September, Nukote sued Office Depot, and chose not to sue Clover at that time. The action was filed as an adversary proceeding within the bankruptcy, therefore providing Nukote’s creditors with the promise of a share of any winnings. The plan of reorganization that was approved late last year further provides for such an outcome.
The case against Clover, however, was filed shortly after Nukote emerged from its bankruptcy. This action therefore will be resolved in the sole favor of Nukote if it can prove its allegations. And the case was filed shortly after Nukote incorporated Nukote Illinois, which allowed Nukote to sue Clover in state court since both companies have residence in Illinois.

Clover responded to this maneuver as follows: “the complaint is as empty as the shell corporation Nukote incorporated just this past week to initiate the suit.”

About the Author: Tricia Judge is the executive director of the International Imaging Technology Council. She may be reached at

Original Source: Nukote Sues Clover for Interference, Unfair Business Practices

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