At the heart of Loyalty Ventures’ troubles was a decision by its second-largest client, Canadian grocery chain Sobeys, to terminate its contract with the company by the end of 2022, Newtyn Partners alleges. The suit claims Bread knew of this for months prior to the spinoff and should have disclosed this to investors.
In Friday’s dismissal bid, Bread also argued that it had no duty to disclose that Sobeys had “threatened to terminate its contract prior to the spinoff, and was renegotiating its terms,” telling the court that Sobeys had just “exercised a contractual right to accelerate the date on which it could terminate its sponsor agreement.”
“[That] does not mean (nor does the complaint allege particularized facts showing) that Sobeys permanently broke off renewal negotiations or gave definitive notice that it would not ultimately sign a new sponsor contract,” Bread’s motion states, adding that it would have been premature to disclose its dealings with Sobeys. It would “put companies in untenable positions that do not serve the investing public” if they were required to disclose things like that, Bread argued.
