This Week in Chancery Court: Viacom Investors May Get Settlement

Long-running litigation led by Viacom Inc. shareholders who say they got shortchanged in the company’s merger with CBS Corp. may be nearing an end. A proposed $122.5 million settlement in the case has been scheduled for consideration this week in Delaware’s Chancery Court.

More noteworthy cases from the court’s calendar:

Monday: EnVen Energy Corp. v. Dunwoody, Del. Ch., No. 2019-0579, trial 7/24/23.

At issue: Oil exploration company EnVen Energy Corp. sued its former president, David Dunwoody Jr., in July 2019, alleging business with one of the Houston-based company’s pipe vendors generated about $305,000 in kickbacks for Dunwoody’s father. Texas courts have awarded Dunwoody over $12 million in separate litigation, after finding Dunwoody complied with his confidentiality obligations, according to a pre-trial brief. Dunwoody has said he disclosed his father’s relationship with the vendor, Oilfield Pipe of Texas, to EnVen. The vendor has said it paid Dunwoody’s father a commission for sourcing its relationship with EnVen and other companies, but Dunwoody had no involvement in the business relationship it had with EnVen.

Court action: Four-day trial begins Monday in Wilmington, Del.

EnVen’s Chancery Case Against Former President on Hold

Monday: K8 Founders LLC v. K8 Investor Holdings LLC, Del. Ch., No. 2022-0993, Zoom hearing 7/24/23.

At issue: Founders of cannabis startup Kultiv8 Group LLC sued a group of seed investors in November, alleging they exploited their control over a construction project to bleed the business dry, then hinged additional financing on terms that let them seize control of the venture. One of the investors named as a defendant, Cory Eagle, denied the allegations and said the lawsuit rehashed claims already rejected by a California judge. The founders also aren’t cooperating with arbitration proceedings ordered by the California court, according to the investors’ motion to dismiss.

Court action: Motion to dismiss. Hearing via Zoom.

Cannabis Startup Founders Accuse Seed Investors of Takeover Plot

Monday: Shumacher v. Mariotti, Del. Ch., No. 2022-0051, Zoom hearing 7/24/23.

At issue: A Funko Inc. investor sued the toymaker’s controlling stockholders in January 2022, alleging they’re abusing its pass-through “up-C” corporate structure to “double-dip” in its profits by blocking distributions from the operating subsidiary to its publicly held parent company. The lawsuit targets several members of Funko’s board, including CEO Brian Mariotti, and its private equity backers, ACON Investments LLC and Fundamental Capital LLC.

Court action: Motions to dismiss and application for award of interim attorneys’ fees and expenses. Hearing via Zoom.

Funko CEO, Board, Backers Accused of Abusing ‘Up-C’ Structure

Tuesday: City of Hialeah Emp Rtmt Sys v. Insight Vent Ptnr LLC, Del. Ch., No. 2022-0846, hearing 7/25/23.

At issue: A Florida pension fund sued Insight Venture Partners LLC in September 2022, claiming the venture capital firm steered one of its portfolio companies, nCino Inc., into an overpriced $1.2 billion deal for another company it controlled, SimpleNexus. The complaint alleges Insight made a greater than 600% profit at the expense of nCino investors when it flipped SimpleNexus, a digital home buying platform in which it purchased a majority stake, to the publicly traded nCino, a digital banking business.

Court action: Motions to dismiss, hearing in Wilmington, Del.

Insight Venture Partners Sued Over $1.2 Billion SimpleNexus Deal

Tuesday: In re Viacom Inc. Stockholders Litig., Del. Ch., No. 2019-0948, hearing 7/25/23.

At issue: Shareholders claimed media mogul Shari Redstone packed Viacom’s board with supporters so she could push through the merger with CBS Corp. without allowing minority shareholders to vote on it. They also alleged the board’s directors negotiated an unfair exchange ratio in the stock-for-stock deal that failed to account for value created by the combination of the entertainment companies. The court in 2020 dismissed claims against the CEO of ViacomCBS Inc., now Paramount Global, Robert Bakish, but allowed the rest of the shareholders’ lawsuit, filed in 2019, to proceed. A notice of a proposed $122.5 million settlement was filed in March.

Court action: Settlement hearing in Georgetown, Del.

Viacom Investor Suit Over CBS Merger Can Proceed, Judge Says (1)

Wednesday: Visnic v. Seegrid Corp., Del. Ch., No. 2022-0202, hearing 7/26/23.

At issue: Former Seegrid Corp. employees allege the robotics business lured them with the promise of equity, then rewrote the terms of their investments as the company’s value skyrocketed so that board members and their affiliates could buy out the workers at a bargain. The lawsuit, filed in March 2022, concerns an incentive plan the company allegedly adopted after emerging from bankruptcy in 2015 as a Giant Eagle Inc. subsidiary. A motion to dismiss filed by Seegrid’s senior leaders says the plaintiffs are “six former disgruntled, at-will employees” who are “disappointed” the company decided to exercise its contractual rights.

Court action: Motion to dismiss. Hearing held via Zoom.

Seegrid Corp. Accused by Ex-Employees of Scheme to Seize Equity

Wednesday: SIIS Holdings LTD v. Samumed LLC, Del. Ch., No. 2023-0255, trial 7/26/23.

At issue: Banker Kamel Lazaar seeks internal files from the parent company of Biosplice Therapeutics Inc. to investigate allegations that a private equity executive at Singapore-based Vickers Venture Partners duped him about an affiliate’s financial backers and partnerships with major pharmaceutical companies. Lazaar’s lawsuit, filed Feb. 28, doesn’t technically allege any outright wrongdoing, but such records cases often reflect an attempt to drum up fiduciary breach claims. Billionaire Osman Kibar, who founded Biosplice, told Lazaar that he had tried to sideline the Vickers executive for “misrepresenting right and left” to potential investors, according to the complaint.

Court action: Trial in Wilmington, Del., before Magistrate in Chancery Selena Molina.

Turkish Billionaire’s Biotech Firm Accused of ‘Scam’ by Banker