Korman

INTRODUCTION

Yeun Korman, Yong Korman, Claudio Federico, Alen Keshishyan, and Eugene Du (the Korman parties) founded a company called Language Select, LLC. United Language Group, Inc. (ULG) purchased Language Select from the Korman parties for $65 million: $60 million in cash and a $5 million promissory note. This lawsuit is about the $5 million note. To obtain the funds for the purchase, ULG borrowed money from two senior lenders. The senior lenders, in turn, required the Korman parties to sign subordination agreements to ensure ULG paid back the senior lenders before ULG paid the $5 million it owed the Korman parties. Among the many terms of the promissory note and subordination agreements were two in particular that ultimately gave rise to the parties’ dispute. First, ULG could not pay the Korman parties any principal owed on the $5 million promissory note until ULG repaid all of the debt it owed to the senior lenders (the Senior Debt). Second, ULG in the meantime had to make quarterly, interest-only payments on the promissory note to the Korman parties; however, ULG could only make interest payments if it was not in default on its borrowing obligations to the senior lenders…