Centronics Corporation v. Genicom Corp.

In the fall of 1986, Centronics sold a book of business to Genicom. Per the purchase agreement, the purchase price would be the consolidated closing net book value (CCNBV) plus $4 million dollars. At closing, a balance sheet dated September 28 was provided with Centronics to provide a final balance sheet within 30 days. After receiving the revised balance sheet, Genicom had 30 days to review and propose any adjustments. If there were any further disputes, the matter would be referred to a New York accounting firm for a final and binding computation (the “arbitration”). Additionally, at the time of closing, Genicom was to pay Centronics the purchase price less $5 million which was to be placed into escrow and released after a final valuation was determined. After arbitration, Genicom had ten days to release funds from the escrow to Centronics.

The closing was held on February 13, 1987. Centronics’ balance sheet showed a net value of $72,529,000 setting the preliminary purchase price at $76,529,000, $5 million of which was placed into escrow. On March 30, Centronics delivered a revised balance sheet showing a value of $83,396,000. Genicom deposited an adjustment amount of $10,867,000 into the escrow fund. Thereafter, Genicom proposed a downward adjustment of $10,213,164. Centronics opposed the adjustment and the matter was submitted to “arbitration.”

As the “arbitration” continued through the summer of 1987, Centronics requested a distribution of $5,653,836, the undisputed amount of the escrow fund. Genicom refused and Centronics brought this action.