Kit Digital launches legal action against Utd. by Content

Kit Digital LogoKit Digital has launched legal action against Utd. by Content, formerly known as Content Solutions International, claiming breach of contract over the latter’s US$18.8 million buyout of Kit Digital’s content solutions business last year.

In June 2012, Content Solutions International agreed to buy Kit’s content solutions arm in a deal that comprised of an initial cash payment of US$1.0 million and a US$17.8 million multi-year earn-out payment obligation based on revenue achieved.

However, Kit alleges that since Content Solutions changed its name to Utd. by Content in January 2013, it has breached its contract. Kit said it is now seeking the return of the asset, alleging that Utd. by Content has not made relevant payments.

“We know that Utd. by Content has customers and is generating revenue. We also know that Utd. by Content is choosing to ignore its obligation to pay Kit Digital a percentage of its revenue as an earn-out payment,” said Fabrice Hamaide, Kit Digital’s Chief Financial Officer.

“When we sold [Utd. by Content CEO] Petr Stránský our content solutions business, he agreed to pay for it. The complaint we filed today seeks to reverse the transaction, effectively returning the assets of utd. by content to KIT digital since none of the promised US$17.8 million in earn-out payments have been made.”

Kit Digital said in April that it had agreed to file for Chapter 11 bankruptcy in the US, in a move to recapitalise the company put its core operating into newly formed group called Piksel.