Republic Bank and Trust Co. in Louisville, Kentucky, sued Green Dot Corp. after the Pasadena-based financial technology and banking holding company revealed it was not pursuing a plan to purchase Republic’s tax refund solutions business.
In a Securities and Exchange Commission filing last week, Green Dot said he was unable to secure Federal Reserve approval or non-objection to the sale transaction.
“As a result, the sale transaction will not go through,” Green Dot said on the record.
The Republic Bank lawsuit, filed in Delaware Chancery Court, accused Green Dot of breach of contract and of failing to “disclose the existence of regulatory problems that would cause delay in closing.”
Republic Bank also said Green Dot said that “receipt of approval or non-objection from its lead regulator is not a contractual condition on closing.”
Green Dot and Republic Bank entered into an asset purchase agreement on May 14 under which Green Dot was to purchase all of the assets and operations of Republic Bank’s Tax Refund Solutions (TRS) business. The deal says Green Dot will pay Republic Bank approximately $ 165 million in cash for TRS, and Republic Bank will provide transition services to Green Dot for TRS in calendar year 2022. The transaction was slated to close in the fourth. quarter 2021.
With the lawsuit, Republic Bank is looking for a specific performance to demand that Green Dot proceed with the transaction.
A Los Angeles Business Journal article quoted Green Dot spokesperson Whit Chapman on Monday as saying that the proposed purchase of Republic Bank’s Tax Refund Solutions business “will not go ahead.”
Chapman did not comment on the lawsuit, but said Green Dot was “unfortunately” unable to secure Federal Reserve approval for the proposed acquisition.
Chapman’s statement also said that Green Dot’s inability to receive Federal Reserve approval “should not be viewed as a negative effect on the business of Republic’s Tax Refund Solutions” and does not affect the ability of Green Dot “to continue to provide high quality services”.