Sleeping Duck Founders Won Court Case Against Biggest Investor Adir Shiffman

The founders of online mattress retailer Sleeping Duck have successfully defended against legal claims from their largest investor, venture capitalist Adir Shiffman. Shiffman had taken the company’s founders, Selvam Sinnappan and Winston Wijeyeratne, to court, alleging that he had been frozen out and “oppressed.”

According to the sources, Sinnappan and Wijeyeratne each have a fortune of $170 million. Court documents filed with the Supreme Court of Victoria reveal that Dr. Shiffman invested $100,000 in 2017 for a 10 percent stake in the company, with an option to acquire an additional 10 percent. He claimed that a condition of his investment was that he would have a significant say in the company’s operations.

Dr. Shiffman alleged that he was progressively excluded from company decisions, including rebranding, website redesigns, and marketing campaigns. He also objected to the pricing of the new Mach II product.

However, on Friday, Supreme Court judge Jim Delany dismissed Dr. Shiffman’s claims and ordered him to pay costs. Justice Delany noted that Dr. Shiffman, who retains a 9.4 percent stake in Sleeping Duck, had not been “prevented from realising the value of his investment.” The court found that interactions between Dr. Shiffman and the founders had “mostly been fun,” and communications provided as evidence did not support his claims of being “shut out or marginalised.”

In a statement, Dr. Shiffman said, “We are carefully reviewing the judgment and considering our options, as an ongoing significant shareholder in Sleeping Duck.”

The legal battle has highlighted the complicated negotiations between founders, investors, and early employees vying for a share of Sleeping Duck, which was once valued at $400 million. A court-ordered valuation in 2022 found the company was worth $45.3 million.

As part of his role, Dr. Shiffman had agreed to identify and lead capital raisings and provide advice in return for equity. Despite a surge in sales during the COVID-19 pandemic, three investor offers to buy a stake in the company did not materialize.