WILMINGTON, Del. (CN) - Three companies run by the Forbes family say a Hong Kong investment firm has not fully paid for its purchase of Forbes Media with money loaned by the family.
Whale Media Investments and its principals, Yam Tak Cheung and Wong Siu Wa, agreed to buy an indirect controlling interest in Forbes Media from its parent, Forbes Media Holdings, with money loaned to it by the parent company, Forbes Financial Services and Highlander Management, according to a redacted lawsuit.
The Forbes family retains a minority interest in the company, the complaint states. Whale Media Investments is also referred to as Integrated Whale in the lawsuit.
Although the complaint filed in Delaware Chancery Court has all monetary information redacted, Forbes Media was reported to be worth $475 million when the 2014 transaction closed. The amount borrowed by Integrated Whale on three promissory notes is unknown.
Once in control of the global media company, renamed Forbes Global Media Holdings, Integrated Whale used its position to rebuff efforts by the plaintiffs - Highland Management, Forbes Media Holdings and Forbes Financial Services - to collect on the debt, according to the complaint.
"Integrated Whale and its principals have steadfastly refused to pay what they clearly owe, and instead have made a series of baseless - and often patently false - excuses and pretexts for their refusal to honor their basic contractual commitments," the lawsuit claims.
Integrated Whale has also "wasted corporate assets and abused their position as controlling shareholder of Forbes Media" by not holding board meetings and causing Forbes Global Media Holdings "to delay the payment of hundreds of thousands of dollars of agreed-upon tax distributions and the provision of required periodic reports of financial information to the Forbes plaintiffs," according to the lawsuit.
The Forbes companies say that the Hong Kong firm's breaches began when it failed to make interest payments on the borrowed money and ignored their demand to pay the entire principal amount under an event of default.
Integrated Whale and its principals have "refused to pay to the Forbes plaintiffs the debt that had become due and owing," and have "actively resisted the Forbes plaintiffs' efforts to collect on the unpaid debt by any means necessary, no matter how improper, including by submitting false testimony to the court in the British Virgin Islands," the complaint states.
The investment firm falsely told a British Virgin Islands court that Timothy Forbes, an owner of the plaintiff companies, agreed to forgive the default, according to the lawsuit.
"Mr. Forbes delivered the exact opposite message at that meeting and demanded immediate payment of the overdue interest," the complaint states. "All correspondence following the meeting confirms the fact that no such waiver was ever given."
The British Virgin Islands litigation is still pending, as is Integrated Whale's potential liquidation due to its failure to pay its debt, according to court filings.
The Forbes companies seek damages for the amount owed under the promissory notes. They are represented by Kenneth Nachbar of Morris, Nichols, Arsht & Tunnell in Wilmington, Del.
Forbes is best known for its list of the 500 richest people in the world. Steve Forbes, who twice ran for President of the United States, still serves as chairman and editor of Forbes Magazine.
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