Bloomberg Law
June 30, 2022, 8:37 PM

Carvana CEO to Face Suit Over Stock Offering During Covid Crash

Mike Leonard
Mike Leonard
Legal Reporter

Carvana Co.'s CEO must face allegations he engineered an insider stock offering at rock-bottom prices at the outbreak of the Covid-19 pandemic in March 2020, then made hundreds of millions in profits when the market recovered, a Delaware judge ruled Thursday.

Chancellor Kathaleen St. Jude McCormick let the case move forward in Delaware’s Chancery Court against Ernest Garcia III, who controls the “used car empire” along with his father, Ernest Garcia II. Although they have defenses—including their claim that the transaction diluted their stake—those “fact intensive” contentions are for a later stage of the case, the judge said.

“The big ...