Fort Worth, Texas – A lengthy legal battle has unfolded between the owners of Cici’s, a popular pizza chain, as two cousins who once collaborated to revive the company face off in court. After 18 months of disputes, a jury has awarded $46 million to Gala Capital Partners, led by Anand Gala, following claims that his cousin, Sunil Dharod, forced him out of leadership after their acquisition of the company.
The dispute highlights the complexities of the partnership, which was established during Cici’s bankruptcy proceedings. Gala Capital and SSCP Management, controlled by Dharod, purchased the chain’s debt in a debt-for-equity swap that allowed them to take over Cici’s operations. Under the terms of their agreement, SSCP held a 70% stake while Gala’s group owned 30%. Together, they formed an entity called Smiley Slice to manage the chain.
Gala’s management led to a notable turnaround for Cici’s, with earnings before interest, taxes, depreciation, and amortization (EBITDA) recovering dramatically, from negative figures to $14 million by 2022. However, following a successful year, Dharod accused Gala of inadequate performance and subsequently suspended his salary while terminating him from his CEO position.
Dharod’s defense claims that Gala was unfaithful to his duties and was privately pursuing other ventures without disclosing them. Gala maintained that both investors had freedom to explore their initiatives, noting that he secured investments in several other restaurant brands during that period.
Gala’s lawsuit also accused Dharod of imposing excessive management fees that peaked at $15 million, hurting Smiley Slice’s financial health. Dharod countered these claims, stating that his fees aligned with industry standards and that Gala had not adequately engaged with the business, as multiple checks sent to him went uncashed.
After the jury’s ruling, attorneys for Gala expressed satisfaction with the verdict, emphasizing its implications for business integrity and accountability. Meanwhile, Dharod’s legal team indicated they are weighing their options for appeal, highlighting that a significant portion of the jury’s award would ultimately benefit him as the majority owner of Smiley Slice.
Although both sides had attempted to negotiate a buyout of Gala’s stake, the process faltered when Gala questioned the evaluation methods proposed by Dharod. The ensuing legal actions culminated in the recent trial, which sought to address issues of trust and fiduciary responsibilities.
The outcome of this case may set a precedent regarding the obligations and ethical considerations in business partnerships. As the fallout from this dispute unfolds, the ramifications will likely resonate throughout the restaurant industry, particularly among emerging and seasoned investors alike.
The article was automatically written by Open AI, and the people, facts, circumstances, and story may be inaccurate. Any article can be requested for removal, retraction, or correction by writing to contact@publiclawlibrary.org.