DALLAS—A recent decision by Texas Northern District Court tells Ennis it can’t overturn a $2 million arbitrator’s award owed to Gildan. The fee covers a severance payment to a former executive at Ennis’ original apparel manufacturing arm, Alstyle.
A court report by Law360 notes U.S. District Judge Ed Kinkead says Ennis “had clearly agreed to indemnify Gildan for the severance payment,” if Gildan decided to terminate the Alstyle executive following its acquisition of the company in 2016 for $110 million.
The report also notes Kinkead says he is “unpersuaded that the arbitrator manifestly disregarded the applicable law in this case,” and has directed Gildan to submit an additional briefing to support its request that Ennis pay its attorney fees.
Law360 says the origins of the suit date back to 2015 when Irshad Ahmad, an executive at Alstyle, expressed interest in making an offer on Alstyle after Ennis floated the idea of selling the entity. At that time, Ennis also transferred its obligations under a severance payment provision of Ahmad’s employment agreement which offered a $2 million severance if a change of control event occurred. Gildan ultimately outbid Ahmad and his entity, A&G Inc., and fired him shortly after that, enacting the severance provision. Gildan reportedly paid Ahmad the $2 million severance, but Ennis refused to hand over the escrowed sum. According to the report, Ennis contested that the change of control event only applied to Ennis changing hands, not Alstyle.
To read the full report, visit https://www.law360.com/retail/articles/1177036/gildan-sees-2m-arbitration-award-confirmed.