A judge in New York has rejected Declan Ganley’s claim that a nearly $20 million (€18.4 million) default debt judgment had been satisfied by the value of shares he surrendered in Rivada Networks, his telecommunications company.
New York supreme court judge Jennifer Schecter said in a ruling this week that “there is no credible evidence” to support Mr Ganley’s assertion that the debt had been wiped out by “the value of the 20,000 Rivada shares” that were auctioned in October 2023.
Mr Ganley has been involved in a long-running dispute with David Shuman, an investor in Rivada, over a default judgment Mr Shuman secured against him, the value of which is now estimated to stand at $20 million after interest.
Mr Ganley had claimed in recent legal filings that the 20,000 shares sold at auction, and bought for $400,000 in a credit bid by Shuman – or $20 per share – were potentially worth $755.55 per share, or more than $15 million in total.
He further argued that the shares might have an even higher valuation based on recent Rivada fundraising rounds, putting the upper end of the price range at more than $5,000 per share, or more than $100 million in total. Such a share price would value Rivada at $12 billion, the court has heard.
Judge Schecter, however, dismissed such valuations, noting that Mr Ganley had said in one court deposition that he was “unsure of the value of the shares” and that he did not “submit an appraisal of their worth”.
She said he cited no authority “that transactions predating a public auction by more than a year are reliable indicators of value as of the date of the auction”.
She added that he did not “submit any meaningful evidence of what occurred in the company since that time or any meaningful financial records from which the court could assess value”.
For this, she said, “he has no excuse”. In his position as the founder and chief executive of the company, “he easily could have submitted compelling evidence of its value, such as an expert valuation based on a discounted cash flow analysis”.
By contrast, she stated in her ruling, Rivada had chosen not to outbid Mr Shuman for the shares, bidding only $320,000 itself, the equivalent of $16 per share.
She said Mr Ganley then “rejected a subsequent offer to buy the shares for $336,000″ – or $16.80 per share.
Because of this, she said, “no reasonable finder of fact could conclude that the shares are worth $15 million”, noting that “such an incredible assertion does not warrant a hearing or further inquiry”.
“After all, Rivada, in possession of material non-public information of its own value, surely would not have passed on the opportunity to repurchase its own shares at such an extreme discount,” she said, concluding that the “only reasonable inference from the evidence submitted on this motion is that the shares were worth $400,000″.
[ Dispute erupts over value of shares in Declan Ganley’s Rivada NetworksOpens in new window ]
As part of the litigation, Mr Ganley has had to turn over a significant number of personal assets as well as the shares to satisfy the default judgment. The assets have included several companies, a pub in Galway, four acres of land and several vehicles.
He has argued in various filings that Mr Shuman should not be allowed to pursue the claim because the original debt has already been paid back. He has argued that it is “black letter law that a creditor cannot get double recovery from a single debt”.
He has accused Mr Shuman of “extortion” and “fraud” for wrongly having held on to a separate tranche of 150,000 shares in the company.
Separately, Rivada is raising billions of dollars to build out a private, un-hackable, satellite-based internet communications system called the OuterNet.
Contacted for comment by The Irish Times, Mr Ganley said: “To ignore the fact that this debt was paid, and proven to have been paid, is interesting. We will of course appeal.”
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