AMC Entertainment (NYSE:AMC) stock is in focus following the company’s submission of a Form 8-K documenting a Stipulation of Settlement relating to several stockholder derivative complaints. The settlement concerns the parties Gantulga, Kenna, Manuel, Dinkevich and Lyon. These plaintiffs have asserted claims related to a previous class action titled Hawaii Structural Ironworkers Pension Trust Fund v. AMC Entertainment Holdings, Inc., et al.
“The Derivative Matters assert that Defendants violated the federal securities laws and/or breached their fiduciary duties by making or permitting the Company to allegedly make materially false statements or omissions about AMC’s business, operations, and prospects following three acquisitions,” said AMC.
Following the acquisitions, AMC attempted to “deleverage,” which resulted in the company allegedly releasing false and misleading statements relating to a secondary public offering and some other public announcements. Afterwards, AMC reported disappointing earnings on Aug. 1, 2017, which led the plaintiffs to believe that previous positive statements concerning the acquisitions were false.
AMC Stock: AMC Looks to Settle Derivative Complaints
Gantulga kicked off the series of derivative complaints in 2018, while Lyon was the last to file in 2021. In March 2023, the U.S. District Court for the Southern District of New York dismissed Lyon’s federal law claims and also declined to issue supplemental jurisdiction over his remaining state law claims. Lyon stated that he would re-file his state claims in Delaware’s Court of Chancery.
A Stipulation of Settlement between the plaintiffs and AMC was entered into on June 14. On Oct. 6, the Court of Chancery preliminarily approved the proposed settlement. Now, a telephonic hearing has been scheduled for Dec. 18 to consider and discuss the proposed settlement. Upon approval of the stipulation and settlement, the complaints will be released and dismissed.
The settlement includes several changes to AMC’s operations, such as appointing a new independent director, improving screening requirements for its Nominating and Corporate Governance Committee Charter and increasing compliance training for specific AMC accounting employees. The plaintiffs’ counsel have also requested to be reimbursed for legal fees of $1 million, which AMC has agreed to pay.
AMC has noted that it has already hired a new independent director, Denise “Dee” Clark, who has already addressed some of the settlement requests.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
