Sycamore Partners is being sued for allegedly breaching the terms of an agreement that formed as part of an acquisition made by one of its portfolio companies.
The private equity firm agreed it would work with Dollar Tree to make the portfolio company self-sustaining after 330 of the discount chain’s stores were bought by Sycamores’ Dollar Express in 2015. However, Dollar Express has struggled and some stores are being liquidated.
In the lawsuit, Dollar Tree said Sycamore breached the material terms of the parties’ agreements and “used Dollar Express as its personal cash cow by siphoning off tens of millions of dollars to secure a quick profit soon after acquiring the business.”
As the acquired stores continued to operate under the Dollar Tree’s group name “[it] is making Dollar Tree look bad,” a source familiar with the matter told pfm.
Dollar Tree is seeking at least $50 million in damages. At the time of the lawsuit’s filing, Dollar Tree also submitted a motion to expedite the case, according to a separate court document.
“Dollar Express and Sycamore Partners believe that the allegations made by Dollar Tree in its lawsuit are without merit,” the two businesses said in response to the lawsuit.
They have filed their own complaint against Dollar Tree, claiming Dollar Tree schemed to put Dollar Express out of business.