HPE will pursue the widow of Mike Lynch for the $4 billion in damages it sought from him over the Autonomy merger following the Brit tech tycoon's recent death in a sailing tragedy off the coast of Sicily.
Lynch was cleared in June of criminal fraud in the US over the 2011 sale of software company Autonomy to what was then Hewlett Packard (HP). He was celebrating that outcome with family and friends on his yacht, Bayesian, last month when it was caught in a freak storm and sunk.
The tech entrepreneur and his 18-year-old daughter Hannah lost their lives. His wife Angela Bacares, who was also on board, was rescued along with 15 others.
The claim HPE intends to pursue pertains to an earlier UK civil trial in 2022 which found in favor of HPE's claim that Lynch and ex-CFO Sushovan Hussain had inflated the apparent value of Autonomy during the acquisition, clearing the way for the US firm to sue for damages.
In a hearing in London in February, lawyers for HPE argued that the company was entitled to $4 billion as a result of the losses incurred from the fraud, although it has yet to be determined by the High Court how much the compensation should be. The judge had given an opinion that the damages awarded would prove to be significantly lower than what the tech titan was seeking.
A spokesperson at HPE told us today: "In 2022, an English High Court judge ruled that HPE had substantially succeeded in its civil fraud claims against Dr Lynch and Mr Hussain. A damages hearing was held in February 2024 and the judge's decision regarding damages due to HPE will arrive in due course. It is HPE's intention to follow the proceedings through to their conclusion."
The Register previously asked HPE on August 22, after the news of Lynch's death was confirmed, if it intended to seek financial reparations from his estate and was told HPE "do not think it appropriate to comment on legal matters in these tragic circumstances."
The lack of comment from HPE only served to fuel speculation in some quarters of the UK media that the company was likely to drop the compensation claim in light of the tragic events that unfolded.
Yet it always seemed inevitable - at least to us - that shareholders would still demand financial compensation, and a failure to press for damages could have opened up HPE to a class action from its own stockholders.
- UK tech pioneer Mike Lynch dead at 59
- Body of Mike Lynch recovered after superyacht sinks
- Lynch missing after yacht sinks off Sicily amid storms
- Brit tech tycoon Mike Lynch cleared of all charges in US Autonomy fraud trial
HPE is incorporated in Delaware. According to financial news site City A.M., the corporate law of that state means HPE would have to make a reasonable business case to take a lesser settlement. HPE could argue that pursuing Lynch's widow for what it is legally owed would negatively impact its reputation and share price, for example.
HP spent $11 billion to acquire UK-based Autonomy in 2011, but the wisdom of that purchase was questioned even before the deal closed. A year later, the tech giant announced an $8.8 billion write-down from the merger, and called in the financial authorities to investigate.
In 2015, HP split into separate entities - HP Inc and HPE - with the latter inheriting the Autonomy legal case.
In related news, Sicilian authorities are understood to be widening their investigation into the circumstances surrounding the death of Mr Lynch and six others on the Bayesian. Marine experts are understood to be puzzled by the sinking of the vessel, which was a modern boat that should have withstood the force of the storm. ®