AMC Entertainment (NYSE:AMC) stock rose, and the company’s AMC Preferred Shares (NYSE:APE) shares fell after the Delaware Court of Chancery refused to fast-track the latter’s conversion into common stock.

AMC had settled an investor lawsuit against the conversion, and a 1:10 reverse stock split, just a few days ago.

The decision sent AMC up 13% overnight, and APE down 12%. AMC is due to open on April 6 at about $4.60, APE at $1.50. The market capitalization represented by the two issues diverged. Trading action is heavy this morning because both stocks are heavily shorted.

AMC Stock: Not So Fast, APE Man

AMC CEO Adam Aron created APE shares so that he could keep raising money with equity, in defiance of the company’s listed share limit. The settlement, which the court has delayed and not denied, would also increase the allowed share count. This, combined with the reverse split, would allow Aron to sell even more shares.

Investors who object to the move believe Aron is deliberately watering down their interests in the company. He is, but he insists it will save the company from the movie theater depression that followed the Covid-19 pandemic lockdowns.

While business has not returned to its pre-pandemic norm, with revenue down 25% in 2022 from its 2019 level, rival Cineworld has been given over to creditors.

What Happens Next?

The decision in Delaware only delays the settlement. AMC stockholders on Stocktwits did not appear worried.

On the date of publication, Dana Blankenhorn held no positions (either directly or indirectly) in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.