Nukote Sues Office Depot for $217 Million
by Tricia Judge, Int'l ITC
Nukote International, Inc. has filed a $217-million lawsuit against Office Depot for breach of contract and a “series of egregious fraudulent misrepresentations” in a Tennessee bankruptcy action. The lawsuit alleges a host of unsavory activity by Office Depot that includes SEC reporting violations and underpayment of sums due to Nu-Kote so draconian that it “brought the Debtor (NuKote) to its knees.” The complaint lays the blame for NuKote’s June Chapter-11filing 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. The complaint states that the parties had a series of contracts that would not terminate until July 2010. In spite of its contractual commitment, NuKote alleges it was improperly forced into a bidding war for Office Depot’s business, which it ultimately moved its business to another company. This further exacerbated NuKote’s financial situation.
In addition, the complaint states that representatives at Office Depot, as senior as its President Chuck Rubin, gave Nukote assurances that their relationship was secure and that Office Depot was financially sound. The action was brought against Office Depot within the NuKote bankruptcy in an adversary proceeding. NuKote’s creditors therefore stand to benefit from a positive outcome for NuKote.
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