Over Z LLC brought a motion for contempt against N-Krypt International Corp. for failing to comply with a consent order requiring the production of audited financial statements, an accounting of investment, and other documents by specific deadlines.
N-Krypt admitted non-compliance but argued good faith, citing auditor delays due to tax season and an interpretation dispute regarding the accounting.
The court, applying the principles from Carey v. Laiken, found that N-Krypt acted in good faith and exercised its discretion to dismiss the contempt motion.
N-Krypt's cross-motion for directions to extend deadlines and schedule a new shareholders' meeting was allowed.
Costs were deferred pending N-Krypt's compliance with the new order.