Malecki Law continues to follow a petition filed in the National Company Law Tribunal (NCLT) in Mumbai, India concerning the takeover of a US litigation data-management firm, Xcellence Inc. (operating under the brand Xact Data Discovery, XDD USA) by a private equity firm, JLL Partners Fund VII, L.P. For background on the case, read “A Cautionary Tale for both Private Equity Investors and Portfolio Companies”. The National Company Law Tribunal (NCLT) is a quasi-judicial forum in India, which adjudicates corporate stakeholder disputes and has all the powers of an Indian civil court.
The legal dispute involves Dominic Thomas Karipaparambil (Dominic Thomas), the 49% shareholder of Xact Data Discovery India Private Limited (XDD India), on one side and on the other side, XDD USA, XDD India, XDD USA’s India-based subsidiary, JLL Partners Fund VII, L.P. (JLL Partners), JLL XDD Holdings LLC. (JLL XDD), an entity owned by JLL, the directors of XDD India. The directors of XDD India include the president and CEO of XDD USA, Mr. Robert Polus and surprisingly the Indian arm of the global accounting firm Deloitte Touche Tohmatsu Limited (Deloitte).
XDD USA was originally formed in 1994 under a different name and operates 17 offices across the United States. XDD India was formed in 2007, by Robert Polus and Dominic Thomas and operates two locations in India. It appears that at some later date, Robert Polus transferred his stake in XDD India to XDD USA, making XDD India a subsidiary of XDD USA. This structure is not atypical from the trend of U.S. data management companies seeking to cut costs by looking overseas for cheaper labor. In this instance, it hypothetically permits a company like XDD USA to offer cut-rate corporate and legal services through its Indian subsidiary, which provides e-discovery and other document review services at a lower cost than what traditional law firms in the U.S. would charge. In early 2018, the private equity firm JLL Partners announced it had reached a deal to acquire XDD USA from its previous owner and manager, Clearview Capital.