Nukote files lawsuit against Office Depot

The court document states “This Complaint is filed to seek redress for a series of egregious fraudulent misrepresentations and breaches of contract committed by OD that forced the Debtor to file these Chapter 11 cases. OD engaged in a cynical effort to defraud a long-time, loyal vendor through a pattern of deception that extended to the highest levels of OD. From late 2008 through May 2009, OD, motivated by its own financial distress, concocted a scheme to fraudulently obtain from the Debtor its most profitable product, private brand imaging supplies, with the smallest possible cash outlay. Through a series of fraudulent misrepresentations and omissions, OD maintained a front of “business as usual” with the Debtor, thus inducing the Debtor to continue shipping product for which OD had no plans to pay, while at the same time OD was preparing to breach its contracts with the Debtor. Also during this time, OD was secretly negotiating with the Debtor’s largest competitor to replace the Debtor as its primary vendor for the same or similar products.”
 
“When OD abruptly and without notice breached its agreements with the Debtors by moving the business to another vendor, the Debtor’s anticipated cash flow and borrowing capacity dropped dramatically, and it was unable to survive without Chapter 11 protection. OD’s actions were intentional, malicious and taken without regard for the devastating damage they caused the Debtor. The Debtor seeks actual, incidental, consequential and exemplary damages of approximately $217,000,000.00 for OD’s willful, malicious and fraudulent misrepresentations, breaches of contract, and violations of the Uniform Commercial Code.”
 
Nukote and Office Depot – a twenty-year business relationship
 
Nukote and its affiliates employ, directly or indirectly, approximately 1100 persons worldwide, and sell their products primarily in the United States, Canada, Mexico and Europe.
 
According to Nukote, for twenty years beginning in 1989, OD and Nukote engaged in a mutually productive business relationship in which Nukote and its affiliates manufactured and sold to OD virtually every type of product it makes. During this twenty-year history, Nukote was OD’s primary vendor for non-original equipment manufacturer (“OEM”) replacements for the specified range of products, and OD became Nukote’s largest single customer, accounting for nearly 40% Nukote’s sales. 
 
Nukote says that the amount of business increased over time such that by 2007 Nukote was supplying OD over $85,000,000 per year of such products. This increase in sales caused Nukote to greatly expand its manufacturing capacity from 1989 to 2009, including the long-term lease and expansion of a manufacturing operation in Monterrey, Mexico in 2008, which was acquired and expanded specifically to ensure that Nukote could meet OD’s requirements for the products it supplied to OD over the last two decades.
 
Nukote also administered OD’s recycling program by which used ink and laser toner cartridges of all types that were returned to OD by OD customers were collected and sent Nukote to be salvaged and re-used.
 
Office Depot has issued the following comment in response to the allegations:
 
“Nukote’s assertions are false. 
 
“For many years, Nukote had been Office Depot’s primary supplier of remanufactured ink and toner products.  On June 3, 2009, Nukote filed for Chapter 11 bankruptcy protection.  For several months prior to that filing, Nukote was significantly past due on amounts owed to Office Depot and, in fact, Office Depot still holds a significant receivable balance for Nukote.  Indeed, it is not Office Depot that is indebted to Nukote, but it is Nukote that is indebted to Office Depot. 
 
“Further, Office Depot denies that it breached its commitments to Nukote by entering into a