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3 Major DXC Technology Lawsuits That Made Waves In 2019

Whether it’s a $666 million win, a draw, or it’s still playing out in court, lawsuits against the business process outsourcing giant have claimed to reveal what goes on behind the scenes.

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DXC Technology vs. HPE

Court: U.S. District Court, Southern District New York

Docket #: 19-cv-07954

Filed: August 2019

Status: CLOSED

Four days before CSC and HPE-Enterprise Services were set to sign the documents in May 2016 that would eventually form DXC Technology, an accountant with Deloitte discovered HPE Enterprise Services was carrying 10,000 leases as debt that would be transferred to DXC upon completion of the deal.

The $1.3 billion of “capital lease” liabilities were “intercompany leases” for assets such as mainframes, servers, laptops and desktops that HPE Enterprise Services used to provides services to customers.

[RELATED: Arbitrators Slam HPE Financial Services’ CFO For ‘Altered Documents’ In DXC Case ]

HPE Financial Services CFO Ian Fowlis rushed back from a trip to India and came up with a solution: Fowlis would convert the leases from capital leases, which regulators count as debt, to “operational leases” which – for reporting purposes – are not considered debt. The deal was struck and once the converting was done, Fowlis’ solution would erase the red off of DXC’s ledger.

But according to an arbitrator’s award document, filed in federal court, not only did Fowlis fail to convert the leases, but he created an “informational stonewall” when DXC officials began asking questions, then fabricated evidence that HPE submitted to arbitrators who were weighing the dispute. All of this resulted in DXC being handed a massive $666 million settlement to offset the $1.3 billion in debt.

The details of the dispute were kept under wraps until DXC sought to have the arbitrator’s award order enforced in court, at which time a federal judge demanded the companies file their paperwork publicly. Both companies have declined to comment on the matter, beyond saying they are glad to have it resolved.

 
 
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