Flipkart and its new owners Walmart have been slapped with a $800,000 demand for advisory services rendered by a US-based firm, Wolet Capital Corp. (WCC). WCC is an investment bank and claims it played a key role in Flipkart’s acquisition of an Israeli firm Upstream Commerce. WCC has filed a lawsuit in New York to recover what it feels is due to it.
The only grey area appears to be the absence of any written agreement on engaging the services of WCC. Even in the statement making the announcement about the acquisition, there is a mention of another investment advisor, Avendus Capital but not WCC.
The other issue here is that the deal appears to have been mooted when Flipkart was being managed by the Bansals and before the Walmart acquisition took place though the final formalities were completed after Walmart took over.
Wolet has referred to the assurances given to it by senior executives at Flipkart that WCC will get its due once the deal was completed. However, when WCC sent in its bill for the services it rendered in the acquisition, of $200,000, Flipkart declined to pay, Wolet claims. Breach of contract and unjust enrichment are the charges slapped by WCC. The court is said to have issued warrants to both Flipkart and Walmart in January, electronically.
To start with, WCC claims that it was on Flipkart’s request that Wolet had done due diligence and led them to Upstream. The initial introductions were also made by them and they had worked on for months. WCC says it had explicit commitments that it would be paid for its services.
Wolet has gone on and named some Flipkart executives; Aakash Goyal, of the Corporate Development Group and Sankalp Gupta, Senior Director, Corporate Development. The deal is said to be worth $40 million. WCC says it had taken up with Flipkart explaining the details of the work they had done for making the deal happen, but Flipkart did not respond.