Plumbers & Pipefitters National Pension Fund, for itself and on behalf of the putative class of purchasers of PSG common stock, filed with the U.S. Bankruptcy Court an objection to Performance Sports Disclosure Statement related to the Company’s Joint Chapter 11 Plan of Liquidation.
The objection asserts, “The Plan, which will pay unsecured creditors in full, has one obvious, overarching goal: to completely disenfranchise defrauded purchasers of PSG Common Stock in order to line the pockets of current Class P7 Shareholders, vulture investors who paid option value at best for their shares well after the fraud was perpetrated. At bottom, the Plan embodies a thinly veiled scheme by the Equity Committee to eviscerate the claims of the Putative Class – the actual victims of the securities fraud that is the subject of the Securities Litigation – and hijack the potentially substantial value remaining in the Debtors’ estates for the exclusive benefit of speculators who not only purchased their PSG Common Stock after the Class Period, but many (if not most) of whom purchased after the Debtors were already in bankruptcy. Piling insult upon injury to the Putative Class, the Plan proposes (but fails) to pay Lead Plaintiff’s individual claim against the Debtors ‘in full’ in a misguided attempt to moot Lead Plaintiff’s claims against the Individual Defendants and send the Securities Litigation back to the drawing board. Presumably, the primary purpose of the Equity Committee’s gambit is to hoard the proceeds of the Debtors’ directors’ and officers’ liability insurance policies for the exclusive benefit of the Equity Committee and its constituency of speculators through the Liquidation Trust.”
In addition, “To that end, the Disclosure Statement cannot be approved because the Plan, on its face, was not proposed in good faith and cannot be confirmed….There is no legitimate reason to rush to confirm the Plan in its current form. The Debtors have sold substantially all of their assets, leaving a substantial pot of cash and the Retained Causes of Action as the only material assets of the Debtors’ estates to administer. There are no businesses to reorganize, wasting assets to sell or preserve, or jobs to save. Distributions to current shareholders in Class P7, which are almost entirely (if not entirely) contingent on the outcome of litigation, will not occur for years after the effective date of the Plan in any event. The Court should not approve a Disclosure Statement that will set into motion a confirmation process for a Plan that is grossly inequitable and fraught with bad faith.”
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