QoS Networks went into examinership in 2002 having raised almost $50m in backing just two years earlier. The bulk of that - $30m - had come from Warburg Pincus. A further $4.5m came from minority investors.

During 2003 QoS worked to expand its worldwide customer base, but problems with "critical equipment" forced it into financial difficulties. It was also claimed there was management dispute over the performance of the company's chief operating officer. In 2001, Warburg Pincus said it would not invest any further funds in the company, which at the time was attempting to secure an additional $10m in finance. Warburg Pincus urged that it be liquidated, according to court documents.

QoS chairman Daniel O'Neill, its co-founder Michael Keane and chief executive James Valentine decided to sue Warburg Pincus after it failed to participate in a capital restructuring that they claimed forced the company into examinership.

Minority shareholders later joined that suit.

However, a New York Supreme Court judge dismissed the claims of breach of fiduciary duty and fraud and said that plaintiffs had failed to prove those charges. Warburg Pincus has been sued for a total of $650m and a further case involving the parties will be heard in Georgia later this year. Warburg Pincus has also countersued, alleging it was misled by the founders about the QoS's financial position.