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New York, NY, United States, 2012/02/23 - Bank’s financing decision killed NYC-area commercial printer, Color-Web, suit alleges; Allegations include fraud and breach of contract; Claim seeks $13.8m - ColorWeb.us.
Color-Web, Inc., a division of 1800Postcards.com, today announced details of ongoing litigation against its bank. Color-Web has sued People's Capital and Leasing Corp., a unit of People's United Financial, Inc., alleging fraud and breach of contract. The amount of the claim is $13.8m.
Color-Web alleges that People's Capital and Leasing Corp. reneged on a financial commitment to provide to it almost $4m in funding for new technology, a state-of-the-art, custom-built printing press, in 2007. The bank provided a $200,000 deposit at that time, the suit alleges. Upon receiving this commitment, Color-Web changed its business operations to accommodate the new technology.
Color-Web contends the bank then pulled the financing as other printing businesses began to suffer financially, in violation of the agreement.
“It is important to note that, in my estimation, the decision to pull back the financing in question was not related to the business performance of Color-Web,” David Moyal, president of Color-Web, explained.
Because the strategic business changes that it made were not quickly reversible, Color-Web believes it experienced material loss as a result of the bank's decision to pull the financing. Color-Web has had to lay off nearly 100 workers in the New York Metro area since the funding was pulled. The company is currently exploring closing up. The parent company of Color-Web, 1800Postcards.com, is the largest commercial printing company still standing in the New York City area.
Statement from Moyal: "In my view, a bank's role is to facilitate commerce. When a bank does something that impedes commerce and destroys the value that a business has earned over many years, its role in the marketplace becomes extremely damaging," said Moyal. "This lawsuit is not just about Color-Web's claims against a bank. It is in defense of the notion that when institutions prey on small businesses and innovators, the most reliable engines of job creation, they should be held accountable for damages that result.
“If our bank is allowed to renege on a commitment to us, then any business’s bank will be able to renege on a commitment to them. Banks, as licensed institutions, should be held to a higher standard, and a signed commitment should be followed through on. 1800Postcards.com signed its first notes with People’s Capital in 2003 – and we honored those commitments, in spite of the economic downturn that ensued.”
He continued: “We arrived at the amount of our claim by estimating what four years of savings on production costs would have totaled, had we been able to use the new technology to grow our business and compete in our highly competitive industry. This is probably not a lot of money to a large institution such as People’s Capital, but their decision to pull our financing was enough to put my business under and everyone who it employed out of work.”
Further Details: Color-Web’s claim is a counter-claim to a previous lawsuit filed by People’s that sought to recover the initial $200,000 deposit on the printer. The original claim was filed in New York State Supreme Court on Sept. 27, 2011 and the counter-claim was filed on Dec. 9, 2011. Both claims share the Index No. 652645/11. Contact Andrew Graham to request copies of these documents.
About Color-Web and 1800Postcards.com
Color-Web (ColorWeb.us) is a mid-sized commercial printing operation in the New York City metro area. It is a unit of 1800Postcards.com/.
1800Postcards.com is a leading professional printer with more than 30 years of business experience as full-service offset printers and over 200 years of combined knowledge in production. Its state-of-the-art, 125,000 square-foot facility is located in the heart of New York City, with an additional web offset plant in New Jersey. This allows the company to print and mail the highest quality postcards on the market today at the most competitive rates in the country.
NYC Lawsuit Index No. 652645/11 - Color-Web / People's Capital and Leasing Corp.