£260m lawsuit as Pendragon are accused of fraud over software business

Credit: Pendragon

Car dealer Pendragon is currently facing a £260m lawsuit in the High Court.

The lawsuit alleges that one of Pendragon’s subsidiaries engaged in fraud and contract breaches by directly selling new software to dealerships in Asia and the Pacific, a product that they were supposed to market through an agreement with Pinewood AP Ltd, a marketing company.

Pendragon has responded by attempting to have Pinewood AP’s claim dismissed, according to reports in The Telegraph.

In a recent court hearing, it has been reported that Pinewood AP requested information from the subsidiary to determine if there is evidence of fraud in the reseller agreements.

A decision on Pendragon’s application is expected soon.

Just last week, the Nottingham-based car dealership agreed to sell its UK motor division to the US-based Lithia group for £280m.

However, this deal faced opposition when Pendragon’s largest shareholder, Hedin, attempted a takeover bid just two days later, which was ultimately rejected.

Pinewood AP claims they were hired by Pendragon to sell the software abroad.

Consequently, they entered into agreements with dealerships and clients, having 631 user accounts across Asia, including high-profile brands such as Porsche, Jaguar, and Audi in Japan

Pinewood AP alleges that Pendragon’s subsidiary failed to make these changes, requested confidential client information, and sold the software directly to Asian customers. Pinewood argues this constitutes “fraud or fraudulent misrepresentation.”

Pendragon, now called Pinewood Technologies, will stay as a listed company, but it will only work on its Pinewood software, which will be used in Lithia’s 50 UK sites.

Company founder, David Neilsen said: “As a start-up, we poured significant time, money, and expertise into the contract, operating under the belief we had a partnership with Pinewood UK (the subsidiary) and Pendragon. In the process, we recruited over 40 people to service the seven countries where we had contracts. Yet, due to the conduct of Pinewood UK, we could not fulfil those contracts, were forced into making most employees redundant and suffered significant damage to our business.

“Our disappointment cannot be understated or ignored. Our leadership and investors are resolute that we cannot and will not stand idly by and let Pinewood UK see this as an acceptable or professional way of working.”