A Special Master is recommending the court deny the objections to the proposed settlement in the latest AMC lawsuit.
Special Master Corinne Elise Amato was appointed in Delaware’s Court of Chancery to address many objections to the proposed settlement, which is the legal key to proceeding with the plan to convert APE shares into common stock, to implement a 1-for-10 reverse stock split, as well as issue more stock.
“I recommend that the Court DENY the Objections to the Settlement as set forth herein,” Amato concluded in her 150-page report.
The final word of statement is expected on the two-day settlement hearing on June 29-30.
In May, a hedge fund also opposed AMC’s proposals in a letter to court.
The letter was e-filed on Monday, May 22nd by Co-Founder and Senior Portfolio Managers Andrew Hahn and Russell Douglas.
In the letter, the hedge fund managers question the authenticity of the proposal’s approval rate and oppose the implementation of the reverse split and conversion.
URSA Fund Management, LLC has a large put position against AMC Entertainment valued at approximately $57 million, per WhaleWisdom.
Both Fintel and WhaleWisdom report the hedge fund has more than 11 million shares in put positions with a small hedge in calls.
A Lawsuit Has Also Been Filed Against Antara Capital
Investors believe Antara Capital has taken advantage of its deal with AMC Entertainment (NYSE:AMC), inevitably affecting all securities holders.
Antara Capital is now facing federal securities litigation seeking the return of its alleged short-swing profits.
“The lawsuit, filed by two AMC investors, accuses the hedge fund, its affiliates, and founder Himanshu Gulati of making more than $20 million on sales of APE units and AMC common stock purchased less than six months earlier.
Federal securities laws require corporate leaders and major stockholders to give such short-swing profits back to the company, a rule meant to curb insider trading,” says Bloomberg.
The hedge fund said in a court filing last month that it has been getting threatening phone calls from people claiming to be AMC stockholders.
That filing asked the Delaware judge to block the theater operator’s highly engaged base of retail investors from seeing confidential court files.
It cited concerns that additional disclosures could “threaten the health and safety” of Antara employees.
The judge ultimately gave the investors restricted access.
The new securities lawsuit was filed Tuesday in the US District Court for the Southern District of New York. The investors leading the case, Dennis Donoghue and Mark Rubenstein, said they made amend their roughly $20 million damages request as they learn more details about the trades they’re targeting.
The shareholders are represented by David Lopez of Southampton, N.Y., and Miriam Tauber of New York.
The case is Donoghue v. Antara Cap. Master Fund LP, S.D.N.Y., No. 23-cv-4985, complaint filed 6/13/23.
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