Color-Web Suing Its Bank, Seeking $13.8 Million
NEW YORK—Feb. 22, 2012—Color-Web Inc., a division of 1800Postcards.com, released details of ongoing litigation against its bank. Color-Web has sued People’s Capital and Leasing Corp., a unit of People’s United Financial, alleging fraud and breach of contract. The amount of the claim is $13.8 million
Color-Web alleges that People’s Capital and Leasing Corp. reneged on a financial commitment to provide almost $4 million in funding for new technology—a state-of-the-art, custom-built printing press—in 2007. The bank provided a $200,000 deposit at that time, the suit alleges. Upon receiving this commitment, Color-Web changed its business operations to accommodate the new technology. The company contends the bank then pulled the financing as other printing businesses began to suffer financially, in violation of the agreement.
“It is important to note that, in my estimation, the decision to pull back the financing in question was not related to the business performance of Color-Web,” explained David Moyal, president of Color-Web.
Because the strategic business changes that it made were not quickly reversible, Color-Web believes it experienced material loss as a result of the bank’s decision to pull the financing. Color-Web has had to lay off nearly 100 workers in the New York Metro area since the funding was pulled. The company is currently exploring closing up. The parent company of Color-Web, 1800Postcards.com, is the largest commercial printing company still standing in the New York City area.
Statement from Moyal:
“In my view, a bank’s role is to facilitate commerce. When a bank does something that impedes commerce and destroys the value that a business has earned over many years, its role in the marketplace becomes extremely damaging,” said Moyal. “This lawsuit is not just about Color-Web’s claims against a bank. It is in defense of the notion that when institutions prey on small businesses and innovators, the most reliable engines of job creation, they should be held accountable for damages that result.