Nutriband, the medical technology company founded by Dubliner Gareth Sheridan, can pursue its lawsuit accusing two companies and their executives of misleading it during partnership negotiations which led to it transferring shares which had a value of $47m (€40.42m).
The company, which also counts former presidential candidate Sean Gallagher as its president, initially filed the suit at the US District Court for the Eastern District of New York in April last year. The lawsuit was made against two companies called Advanced Health Brands and TD Therapeutic and three executives, Raymond Kalmar, Paul Murphy and Michelle Polly-Murphy.
Nutriband claimed the defendants made "materially false and misleading statements" to make their companies seem more desirable and allow for the exchange of stock.
According to court documents, Kalmar allegedly contacted Nutriband in 2016 to offer a partnership with his two health care companies, Advanced Health Brands and TD Therapeutic, and their network of sales representatives.
Kalmar is said to have claimed his companies were on the verge of closing a deal to sell their products at Home Depot, in which the US retailer would purchase 1.2 million insect repellent patches.
In 2017, the parties entered into a share exchange agreement, which saw Nutriband issue five million shares of company stock to the defendants as well as two unidentified people which it said were worth $47m when it filed its lawsuit last year.
The defendants agreed to assign all of their shares of Advanced Health Brands and TD Therapeutic common stock to Nutriband. They allegedly never executed the necessary documents or took any other measures to transfer ownership.
The defendants filed a motion to dismiss the allegations in September 2019.
On Monday, US judge Nicholas Garaufis denied the defendants' motion, finding Nutriband had adequately alleged they made "numerous misleading statements" and had the motive and opportunity to commit fraud.
Garaufis said it had adequately pleaded that the defendants made misrepresentations to make their companies seem more desirable and allow for the exchange of stock.
The judge also described Nutriband's allegations as "cogent and compelling". Based on Nutriband's claims, he said it would "strain credulity" to believe the high-ranking executives of the corporate defendants "were not involved, and aware of, these misrepresentations".
Sunday Indo Business