As American author Charles Dudley Warner once wrote: “Regrets are idle; yet history is one long regret. Everything might have turned out so differently.”
We bet Maggie’s Moos is feeling Warner-ish these days. Maggie Moos is a franchised chain that operates nearly 200 ice cream “treateries,” as they affectionately dub their restaurants, in the US. NexCen Brands acquired the company in March 2007, planning to leverage NexCen’s international team of franchise management specialists to grow the MaggieMoo’s brand both domestically and internationally.
The buyout gone wrong, and BigLaw, after the jump.
Don’t remember NexCen? Let us remind you. They’re the self-proclaimed “brand acquisition” comapny that couldn’t, despite portfolio companies that included a host of mall staples: Bill Blass; Athlete’s Foot; Marble Slab Creamery (is that a ripoff of Cold Stone?); Pretzel Time; Pretzelmaker; and Great American Cookies. NexCen planned to make millions in the franchising business.
But then the company fired its CFO, and delayed filing a 10-Q last year, in part because its auditors had “substantial doubt” about the company’s ability to continue as a going concern. Oh, and NexCen also announced that investors should no longer rely upon its 2007 financials.
Catch up to April 2009 and you’ll find yourself in Supreme Court of New York along side some Big Law players – the sellers of Maggie Moos recently filed a claim against NexCen as the Buyer under an Agreement and Plan of Merger dated “on or about February 7, 2007″ (can’t get the exact date of the executed agreement right? what?). Pursuant to an earnout under the Agreement, Maggie Moos was owed almost $850,000, which was reduced to just over $500,000 after NexCen made a claim for indemnification on a calculation unrelated to the earnout.
So what’s an ice-cream making cow to do? Retain franchise law guru Craig R. Tractenberg (LaSalle BA ’78, Temple JD ’81) at Nixon Peabody and sue Nexcen for $529,158, plus interest as to the Earnout Payment from March 2008, and statutory interest from the date of judgment, costs and attorney’s fees as recoverable under NY law. Recent filings show NexCen to be represented by Kirkland & Ellis.
Oh, and guess what – Kirkland senior partner George Stamas (Penn BS ’73, Maryland BS ’76) is listed as director on NexCen’s website. His bio describes him as
counsel to, and a limited partner of, the Baltimore Orioles baseball team and also of Lincoln Holdings which holds interests in the Washington Wizards and Washington Capitals.
Not really sure about any empirical evidence, but we thought law firms were moving away from representing companies which maintain of such firm’s partners as a director – something about director liability and independent legal advice. Stamas feels no such compunction though. The former honoree as “one of the leading 45 lawyers in America under age 45″ (14 years ago) sits on the boards of several other companies.
Does your firm or company allow lawyers to serve on boards?
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