Axar’s $416 Million StoneMor Deal Draws Suit for ‘Illicit Booty’

Axar Capital Management LP is facing investor litigation over claims it exploited its control of StoneMor Inc., a nationwide funeral and cemetery business, to force through an underpriced $416 million take-private buyout.

The lawsuit, made public Monday, also targets members of StoneMor’s board at the time of the deal—several appointed by Axar, which already held a 75% stake in the “deathcare” company. It accuses them of rubber-stamping a heavily discounted sale after a “kabuki” negotiation process.

Given Axar’s “publicly stated intention to not sell its shares, it should come as no surprise that the company only received limited interest” during ...