2009AP2757 Grice Engineering Inc., et al. v. Innovations Engineering Inc., et al.

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Contracts
Asset purchase agreements

This appeal arises out of a dispute between Grice Engineering, Inc., and Innovations Engineering, Inc., after Grice Engineering purchased Innovations’ business assets. In the nonfinal order that is the subject of this appeal, the circuit court concluded that Grice Engineering was in default for failure to make payments required under the asset purchase agreement and the promissory note and that Innovations was therefore entitled to enforce its rights under the stock pledge agreements. The circuit court rejected the argument of Grice Engineering and its bank that the subordination agreement between the bank and Innovations, which made Grice Engineering’s debt to Innovations subordinate to its debt to the bank, bars enforcement of the stock pledge agreements. The court also rejected their argument that the subordination agreement requires dismissal of Innovations’ counterclaims to collect under the note. The court concluded that the stock pledge agreements are not subject to the subordination agreement and, in the alternative, the subordination agreement is unconscionable.

The first issue we address on appeal is whether the stock pledge agreements are covered under the standstill clause of the subordination agreement, thus barring their enforcement. We conclude they are covered. The second issue we address is whether the subordination agreement, and in particular, the standstill clause, is unconscionable under Illinois law. We conclude it is not. The third issue we address is whether there are factual disputes on the issue of Grice Engineering’s default. We conclude it is undisputed that Grice Engineering is in default to Innovations under the note. Accordingly, we reverse and remand for further proceedings consistent with this opinion. Not recommended for publication in the official reports.

2009AP2757 Grice Engineering Inc., et al. v. Innovations Engineering Inc., et al.

Dist IV, Rock County, Welker, J., Vergeront, P.J.

Attorneys: For Appellant: Meier, Eric J., Milwaukee; Wylie, Joseph C., II, Chicago, IL; Lee, Sangmee, Chicago, IL; For Respondent: Carney, James A., Janesville; Isackson, Christina, Janesville

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