Diamond Castle Holdings, which brought a call centre handling customer care for Verizon Wireless in 2006 has started legal action against the seller claiming that vital information about the Verizon contract was not disclosed during the sale.
In 2006, the New York based investment firm brought the Florida based call center operator, PRC from Barry Diller's IAC for US$278 million - but the firm filed for Chapter 11 bankruptcy protection in January 2008, citing an unprofitable relationship with a key client and lower percentage of business serviced at offshore sites compared to competitors. The firm carried on operating and emerged from bankruptcy protection in June having wiped out much of Diamond Castle's investment.
In the lawsuit, Diamond Castle claims that it was told a recently signed contract with Verizon Wireless would add $48 million to PRC's 2007 revenue and boost earnings by some $8 million - however, the contract actually ended up costing the firm some $18 million in 2007 and was projected to still be loss-making in 2008.
The company is also claiming that IAC mislead it about wage costs at a key office in Texas and concealed problems about staff retention. Following the purchase, Verizon Wireless threatened to terminate the contract citing poor performance by the call center operator.
Diamond Castle is seeking US$135 million in damages from IAC.
Posted to the site on 31st August 2008
Posted to: www.cellular-news.com/story/33357.php