Dollar Tree Stores has filed a motion to dismiss a lawsuit alleging that it purposefully “killed” 330 stores it sold to Sycamore Partners.
As previously reported, Dollar Tree and Sycamore sued one another last month, each blaming the other for the failure of Sycamore to turn the stores, which were divested as a condition of the Dollar Tree-Family Dollar merger in 2015, into a viable discount store chain that was to be known as Dollar Express. Sycamore earlier this year sold those units to a third competitor, Dollar General, saying it was unable to make a viable business of them.
Dollar Tree alleges that Sycamore owes it more than $50 million for unpaid goods and services provided in the period during which Sycamore was to convert the stores to the Dollar Express banner. Sycamore contended that Dollar Tree conspired to trigger the failure by subjecting the spun-off stores to competitive openings, discriminatory pricing, and inadequate staff and services during the transition period. That forced Sycamore to wind down and sell.
In its motion to dismiss, Dollar Tree said Sycamore’s claims were “pure unsupported fantasy,” many arising from a misinterpretation of the Transition Services Agreement between them.
“Sycamore Partners failed to invest required capital in the fledgling company or even to make the most basic preparations for its operation as a long-term business,” the motion, filed in Delaware Chancery Court, said. “Worse, Sycamore siphoned cash out of the company, leaving it unable to meet its basic business needs.”