Item 1.01. Entry into a Material Definitive Agreement.
Settlement Agreement
As previously disclosed in Princeton Capital Corporation's (the "Company") prior
filings with the Securities and Exchange Commission (the "SEC"), on March 14,
2019, the Company filed a lawsuit (the "State Litigation") in the 165th District
Court of Harris County, Texas (the "Texas District Court") against Great Value
Storage, LLC ("GVS"), World Class Capital Group, LLC ("World Class"), and Natin
Paul. GVS is one of the Company's portfolio companies. The State Litigation is
captioned as Princeton Capital Corporation v. Great Value Storage, et al., Case
No. 2019-18855. On March 9, 2021, the Texas District Court ordered that GVS and
World Class were liable to the Company for contract damages of $9,759,713.84 and
attorneys' fees of $150,887.50 (the "Judgment"). On September 8, 2021, the court
granted the appointment of a receiver.
As also previously disclosed in the Company's prior filings with the SEC,
certain affiliated parties of GVS, including GVS Texas Holdings I, LLC, have
filed a voluntary petition for relief (the "Bankruptcy Cases") under Chapter 11
of the United States Bankruptcy Code in the United States Bankruptcy Court for
the Northern District of Texas (the "Bankruptcy Court"). On April 27, 2022, the
Company commenced an adversary proceeding in the Bankruptcy Court captioned
Princeton Capital Corporation v. GVS Texas Holdings I, LLC, et al, Adv.
Proceeding No. 22-03043 (the "Adversary Proceeding") alleging causes of action
against certain related parties for, among other things, fraudulent transfer and
breach of contract.
On September 2, 2022, the Company, Natin Paul (on behalf of himself individually
and on behalf of all entities that he either owns or controls), Natin Paul (on
behalf of all adversary defendants in the Adversary Proceeding), Natin Paul (on
behalf of the reorganized debtors in the Bankruptcy Cases), World Class Holdings
I, LLC, and Phoenix Lending, LLC, as the Assignee of the Transaction Documents
(including certain Promissory Notes) that were the subject of the State
Litigation, entered into a settlement, assignment and acceptance agreement (the
"Settlement Agreement") pursuant to which, pending approval by the Bankruptcy
Court and certain other conditions precedent, the Assignee will pay to the
Company the amount of $11,372,698.89 within three (3) days after the Bankruptcy
Court's approval and the completion of certain other conditions precedent set
forth in the Settlement Agreement, in exchange for (i) duly endorsed Transaction
Documents, (ii) notices of dismissal with prejudice in the Adversary Proceeding,
(iii) notices of the assignment of the Promissory Notes and Judgment, and (iv)
notices withdrawing certain claims by the Company.
The foregoing description of the Settlement Agreement does not purport to be
complete and is qualified in its entirety by the text of the agreement, a copy
of which is expected to be filed as an exhibit to the Company's Form 10-Q for
the quarter ended September 30, 2022.
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