Mudrick Capital Management, L.P. v. Globalstar, Inc.

Court: Court of Chancery of the State of Delaware
Case Number: 2018-0699-TMR
Judge: Vice Chancellor Tamika Montgomery-Reeves
Case Contacts: Mark Lebovitch

On September 25, 2018 BLB&G filed a Verified Complaint for Derivative and Direct Claims (the “Complaint”), on behalf of Globalstar, Inc. (“Globalstar” or the “Company”) and for the benefit of Mudrick Capital Management, L.P. and Warlander Asset Management, LP (collectively, “Plaintiffs”) to hold the fiduciaries who make up the Board and Senior Management and who control the Company to account for their breaches of duty in connection with a scheme to depress the Company’s stock value in order to effect unfair squeeze out transaction. Plaintiffs sought damages in connection with fees and expenses incurred in pursuit of the scheme; an unlawful stock grant to bribe Special Committee members; controlling shareholder Jay Monroe’s stock sale at a time when he was in possession of material, non-public information regarding the Company, and related relief. Plaintiff sought specific findings of breach of fiduciary duty against each individual defendant to allow Plaintiffs to bring a subsequent action under Section 225 to permanently bar one or all of them from ever again serving as a director or officer of a Delaware corporation.

In mid-December 2018, following extensive negotiations, the parties announced resolution of claims that Plaintiffs had asserted, which would include resignation of two of the Director Defendants, election to the Globalstar Board of two new independent directors nominated by Plaintiffs and elected by stockholders other than Thermo and its Affiliates (the “Thermo Parties”). Furthermore, the proposed settlement will create a committee that has broad powers to effect and decide corporate strategy, thus removing Jay Monroe from control in almost all respects permitted by Delaware law. 

On December 17, 2018, the Parties entered into a Stipulation and Agreement of Settlement, Compromise and Release (the “Stipulation”) setting forth all of the terms and conditions of the proposed settlement.  Attached is a copy of the Stipulation of Settlement.

Notice was given to stockholders on February 1, 2019 in accordance with the Court’s Scheduling Order.

The Settlement Hearing was held on April 1, 2019, in the Court of Chancery of the State of Delaware.

Copies of the Complaint, Stipulation, Scheduling Order, and Notice are available on the Case Documents page.

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