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Symbiont.io, Inc v. Ipreo Holdings, LLC

Symbiont.io, Inc v. Ipreo Holdings, LLC

Court of Chancery of Delaware

May 25, 2021, Submitted; August 13, 2021, Decided

C.A. No. 2019-0407-JTL

Opinion

MEMORANDUM OPINION

LASTER, V.C.

Symbiont.io, Inc. and Ipreo LTS, LLC1 established a joint venture. By combining forces, Symbiont and Ipreo planned to revolutionize the secondary market for syndicated loans. Symbiont committed to provide distributed ledger and smart contract technology. Ipreo committed to provide a management team with expertise in the syndicated loan industry, an existing user interface with patented loan trade servicing technology, and procedures and know-how for streamlining [*2]  the processes involved in servicing and trading syndicated loans.

Symbiont and Ipreo entered into an agreement to govern their joint venture (the "JV Agreement"). They implemented their joint venture through Synaps Loans LLC, a Delaware limited liability company (the "Company" or the "Joint Venture").

The Company's prospects were bright. A single product called ClearPar, owned by IHS Markit Ltd. ("Markit"),2 commanded a monopolistic 99% share of the market for intermediary services for syndicated loans. Markit had not made material improvements to ClearPar since acquiring it in the aughts, and the secondary market for syndicate loans was notoriously inefficient. With a superior technological solution, the Company believed it could take market share from ClearPar, particularly if the Company had the backing of major industry participants.

By March 2017, the Company had completed a successful proof-of-concept demonstration of its technology. By early 2018, the Company was well on its way to securing equity financing from a syndicate of major banks. Four banks had signed a nonbinding term sheet under which they would invest in the Company and serve as its anchor customers. The Company needed [*3]  at least one additional bank to close the financing round, and it had several prospects who were likely to invest.

Everything changed in May 2018 when Markit announced an agreement to acquire Ipreo. The idea that Markit would allow the Company to emerge as a competitor to ClearPar was an obvious non-starter. The Company's most promising investment prospect declined to sign the term sheet because of Markit's looming acquisition, and one of the cornerstone banks that had signed the term sheet reconsidered its support.

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2021 Del. Ch. LEXIS 174 *; 2021 WL 3575709

SYMBIONT.IO, INC., Plaintiff, v. IPREO HOLDINGS, LLC, IPREO LTS LLC, IHS MARKIT LTD., and MARKIT NORTH AMERICA, INC., Defendants.IPREO HOLDINGS, LLC, IPREO LTS LLC, IHS MARKIT LTD., and MARKIT NORTH AMERICA, INC., Counterclaim Plaintiffs, v. SYMBIONT.IO, INC., Counterclaim Defendants, and SYNAPS LOANS LLC, Nominal Counterclaim Defendant.

Notice: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

CORE TERMS

Affiliate, joint venture, Non-Competition, parties, Sponsors, technology, entity, Acquisition, breached, Holdings, contractual, demonstration, plain language, obligations, platform, settlement, smart, financing, profits, banks, contracts, deliver, damages, syndicated, customers, ownership, indirectly, viable, restrictive covenant, term sheet

Business & Corporate Compliance, Breach, Breach of Contract Actions, Elements of Contract Claims, Contracts Law, Contract Interpretation, Intent, Third Parties, Contract Interpretation, Governments, Legislation, Interpretation, Contract Conditions & Provisions, Contracts Law, Contract Conditions & Provisions, Types of Contracts, Oral Agreements, Waivers, Measurement of Damages, Foreseeable Damages, Benefit of the Bargain, Civil Procedure, Remedies, Damages, Compensatory Damages, Measurement of Damages, Types of Damages, Liquidated Damages, Covenants, Real Property Law, Encumbrances, Restrictive Covenants, Enforcement of Restrictive Covenants, Nominal Damages, Lost Profits, Torts, Compensatory Damages, Measurements, Business & Corporate Law, Limited Liability Companies, Dissolution & Winding Up