Thought Works - Controversies

Controversies

ThoughtWorks is currently in a legal battle with SV Investment Partners (SVIP). In 2000, SVIP invested approximately US$26.6 million in ThoughtWorks. SVIP invested in Thoughtworks in large part because it was attracted to the possibility of an IPO in the near term. Both parties believed that ThoughtWorks would in the next few years undertake an initial public offering that would allow SVIP to cash out its investment. To guard against the possibility that such a transaction would not occur, the parties negotiated a provision in the ThoughtWorks corporate charter for the mandatory redemption of SVIP’s preferred stock after five years. In effect, on 5 April 2005, five years from the closing date, SVIP claims they should have had a right to put (i.e., have the company redeem) all of its preferred shares for approximately US$43 million.

This case was decided in 2006. The company then began a process to redeem preferred shares on a quarterly basis with what it determined to be the legally available funds for redemption. In 2007 SVIP initiated another suit to force the company to redeem all its shares at once. In 2010 the Delaware court ruled in ThoughtWorks’ favor, and SVIP is appealing the decision to the Delaware Supreme Court.