Tony Blank Family Trust v. Trade Street Residential, Inc.
Updated: November 30, 2015On July 15, 2015, Labaton Sucharow filed an amended class action complaint against the members of Trade Street Residential, Inc.'s Board of Directors (Board) for breaching their fiduciary duties to its shareholders in connection with the proposed sale of Trade Street Residential, Inc. (Trade Street) to Independent Realty Trust, Inc. (IRT). The complaint also charges certain hedge funds holding large interests in Trade Street with aiding and abetting those breaches and unjust enrichment.
Status: Ongoing Case
Status: Ongoing Case
On May 11, 2015, Trade Street announced that its Board agreed to sell the company to IRT in a deal in which current Trade Street stockholders would receive a mix of cash and IRT stock purportedly valued at $7.60 (the proposed transaction) for each share of Trade Street common stock. The complaint alleges that the actual consideration being offered to Trade Street shareholders is presently closer to $7.00 per share. In addition to providing current Trade Street stockholders grossly inadequate consideration, the complaint alleges, the proposed transaction is the end result of a self-interested scheme by which two hedge funds, Senator Investment Group and Monarch Alternative Capital, surreptitiously took control of Trade Street and are now able to quickly and profitably exit their investment through a forced sale of the company. The complaint further claims the proposed transaction is unfair to stockholders due to the involvement of a third hedge fund, BHR Capital, which owns more than five percent of Trade Street's common stock and (1) began purchasing substantial amounts of IRT stock while Trade Street was exploring a deal with the company and (2) had a conflicted representative on Trade Secret's Board that the Board members inexplicably permitted to be involved in the proposed transaction process.
The plaintiffs seek to recover monetary damages resulting from the proposed transaction as well as all unjust benefits obtained by the three named hedge funds.
On September 25, 2015, the defendants filed a motion to dismiss.