Attractive Nuisance
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@annmlipton Thanks! I actually think I worked this one out. The complaint leans completely on Section VI of the Certificate of Designations, but that Section is relevant only to "Common Stock issued by the Corporation after the Closing Date and prior to the Conversion Date". However, here the Common Stock will be issued *after* the conversion date. So I think the complaint will be immediately chucked out.
Is it fair to summarize the proposed injunctive relief as "go ahead with the conversion on the scheduled date, but when it comes time for the settlement just pay the same amount of stock to APE holders as well"? Thus meaning AMC holders will have gained nothing from the settlement.
Any idea how the court will react?
@annmlipton Thanks again for your commentary - it turned out that the $APE complaint really did end up happening.
https://www.docketalarm.com/cases/Delaware_State_Court_of_Chancery/2023-0835/Simons_v._AMC_Entertainment_Holdings_Inc/92351725/
https://www.docketalarm.com/cases/Delaware_State_Court_of_Chancery/2023-0835/Simons_v._AMC_Entertainment_Holdings_Inc/92351725/
@annmlipton Got it - it totally makes sense that APE holders angry about being diluted (by the settlement consideration relating to AMC shares only) might prefer to sue for monetary damages rather causing a delay in conversion. It just seems so weird to me that AMC holders complained and got some settlement consideration at the expense of APE holders, and then APE holders might complain about the consideration and get monetary damages, which necessarily must come at the expense of AMC holders.
@annmlipton This stood out to me, because presumably it's the reason they tried to sneak the APE release into the settlement. In a footnote it was noted that an APE holder unhappy about the settlement consideration could pursue claims elsewhere...but how would that work in practice? Would such a claim potentially delay conversion, hence why the company is scared of it? The company and AA have often claimed the units are equivalent, which sits poorly with a conversion settlement specific to AMC.
@annmlipton So assuming interlocutory appeal, we might see A) mishmash upheld, B) SEC wins, C) Ripple wins. Just wondering if you have a view on how likely each is? Seems like 2nd Cir would not likely go along with A?
@annmlipton Thanks! And yes I was thinking in terms of the psychology of the judge. With no amendment it seems harsh to ban the conversion, since that would probably kill the company. It might incline her hold her nose and wave the conversion through.
On the other hand, if an amendment was passed it would offer a rather neat way out for the judge, who could refuse to go along with the sketchy APE stuff, but the company could survive by holding a new vote, or (maybe?) by relying on the old vote.
@annmlipton Might the amendment incline the judge to say "Your original conversion vote was not legit, but don't worry - thanks to this new amendment you can just go and hold a new conversion vote (with only AMC votes counting, but with only a majority of AMC votes cast needed not an absolute majority)."
Presumably the company would still win a vote if only a majority of AMC shares cast was needed, but it would take a while to organize.
@annmlipton This is really interesting. Do you think this proposed amendment makes it more or less likely Adam Aron gets the quick resolution he wants from the court?
Sorry for dumb question but I heard the 60 days thing (and potential exceptions to it) in your interview with Tony Denaro, but was wondering if you might be able to tell me what the provenance is of that number? Is it set down somewhere in writing, or an unwritten tradition in the Delaware Court of Chancery? Or something else?