Royal Philips Electronics NV (PHIA) defeated a lawsuit in which the company was accused of defrauding an Italian television maker out of at least 200 million euros ($275 million) in a dispute over a loan.
Delaware Chancery Court Judge Donald Parsons Jr. rejected claims by Carlo Vichi, founder of Italian TV maker Mivar di Carlo Vichi SpA, who argued he was duped into investing in a Philips venture to make cathode-ray-tube televisions just as flat-panel TVs were becoming popular. He lost his investment when the Philips affiliate sought bankruptcy protection in 2006, according to court filings.
“I conclude Vichi has failed to demonstrate, under Delaware law, that Philips N.V. is liable” for fraud in connection with the loan dispute, the judge wrote in a Feb. 18 ruling.
The decision in the Vichi case comes almost a month after Philips executives agreed to transfer the company’s remaining stake in television-joint venture TP Vision as it sells some consumer-electronics lines to focus on more profitable products such as cancer scanners. In addition to full control, venture partner TPV Technology will get a one-time payment of $67 million, the company said Jan. 20.
Philips, the world’s largest lighting company, is seeking to improve its profitability by 2016 by making a push in China, where sales of products such as air purifiers are exceeding company forecasts. The Amsterdam-based company racked up better-than-estimated profit in the fourth quarter.
Philips officials were pleased Parsons concluded the electronics maker “was not responsible in any way for Mr. Vichi’s losses,” Garrard Beeney, a company spokesman, said in an e-mailed statement.
Rolin Bissell, one of Vichi’s lawyers, said in an interview yesterday that he hasn’t spoken to his client about Parsons’ ruling and couldn’t comment.
Vichi sued Philips in 2006 over the loan he made to the manufacturing joint venture between the Dutch company and Korea’s LG Electronics (066570) Inc. The venture focused on making tubes used in televisions and computer monitors.
LG Philips Displays suffered as cathode-ray-tube TVs were supplanted by flat-screen rivals by 2006. The more than $2 billion joint venture defaulted on its debt in 2006 and sought bankruptcy protection from creditors in the Netherlands, according to court filings.
The Italian executive alleged he was defrauded by Philips’ representatives, who assured him the loan to the joint venture was backed by the conglomerate and the investment was “as safe as the Bank of Italy,” according to court filings.
Parsons found that Vichi waited too long to bring his fraud claims and the executive wasn’t conned about the unit’s financial health and prospects by Philips’ representatives, according to the ruling.
The case is Vichi v. Koninklijke Philips Electronics NV, CA2578-N, Delaware Chancery Court (Wilmington).
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