It appears that the injunction filed by Daedong USA, the U.S. subsidiary of the agricultural machinery manufacturing and sales corporations Daedong, was dismissed by a local court.
The injunction was related to a 11.4 billion won damages lawsuit that Daedong filed against former executives of Daedong USA, and industry watchers say Daedong could also lose the main suit.
According to the legal community on the 23rd, a North Carolina court in the United States recently dismissed the injunction filed by Daedong USA. The injunction sought to lift the blocking action by Ki Finance, which was in charge of operating the company's enterprise resource planning (ERP) system, that cut off access to Daedong's ERP system.
Ki Finance's blocking of access to the ERP system came after Daedong failed to pay fees totaling $2.25 million.
Since September 2022, Daedong USA had entrusted Ki Finance with the operation and management of an ERP portal it developed with DataScan (a loans and inventory management solutions company), but last year it refused to pay, arguing the contract itself was invalid.
In the end, Daedong USA terminated its contract with Ki Finance and reclaimed the authority to operate and manage the portal.
Daedong USA's termination of the contract stemmed from an audit conducted after new management took office in Dec. 2023. Daedong USA concluded there were problems with the contract and that former executives who led it extracted private gains through it.
Daedong USA filed a lawsuit against Ki Finance as well as the former CEO who led the contract, the chief financial officer, and finance team staff. It seeks a refund of the $8.2 million paid to Ki Finance and compensation from each defendant for damages caused to the company. Daedong USA also argued the defendants extracted $770,000 in private gains through the contract.
However, the court dismissed the injunction, saying Daedong USA failed to show a reasonable likelihood of success on the merits. The court also said Daedong USA's assertion that the contract with Ki Finance was improper and intended for the defendants' private gain was based on inference and lacked sufficient evidence.
With Daedong USA's injunction dismissed by the court, industry watchers say the chances of prevailing on the merits are low. The lawsuit filed by Daedong USA is facing summary judgment next month.
An attorney said, "Because the court's dismissal of the injunction is bound to affect the main suit, Daedong USA is likely to receive an unfavorable ruling," adding, "Moreover, considering the court's view that Daedong USA's claims are based on inference and lack sufficient evidence, it appears Daedong USA filed the suit to harass innocent former executives."
Daedong said it "will review and respond through the U.S. subsidiary."