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Cloud House puts Bulletproof in the legal firing line

Cloud House puts Bulletproof in the legal firing line

Claims Bulletproof allegedly missed performance targets deliberately

Bulletproof (ASX:BPF) has been dragged into a court battle following claims it allegedly mismanaged the acquired business operations of Cloud House in a bid to miss performance targets and prevent multimillion-dollar earn-outs.

The ASX-listed cloud hosting provider acquired the Auckland-based cloud specialist in January 2016, in a deal worth NZ$1 million up front, with a further NZ$4.2 million to be paid in a 50/50 split of cash and shares based on performance until 30 June 2017.

Yet, New Zealand High Court filings lodged by Cloud House directors claim the Australian cloud company allegedly managed the business in a way to intentionally miss such performance targets, alleging losses of NZ$3.8 million as a result.

Specifically, the claim alleges that Bulletproof’s management and business decisions after the acquisition of the Cloud House business assets resulted in the business “not achieving” the earn-out to which it is alleged to be entitled.

In addition, the claim also alleges that Cloud House was “misled” as to Bulletproof’s capabilities, customer base and access to managed services.

In response, Bulletproof has denied claims, insisting the organisation managed the Kiwi business in the “best interests” of the company, viewing the claim as “speculative and baseless”.

“Bulletproof disputes the allegations made and has foreshadowed a counter claim against Cloud House in respect of Cloud House’s financial position and projections in the course of the acquisition of the Cloud House business,” Bulletproof told shareholders.

“The Board has taken legal advice, and considered the facts and matters raised in the claim. In light of that review and the board’s assessment of the claim, the board considers it to be without merit and will vigorously defend the proceedings,” it said.

As reported by ARN, the purchase helped expand Bulletproof’s offerings around Amazon Web Services (AWS) within the New Zealand market, leveraging Cloud House’s local capabilities within the cloud.

With offices in Auckland and Wellington, Cloud House operated as the country’s largest AWS advancing consulting partner, helping cement Bulletproof’s position within the Kiwi industry.


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