Michigan company settles commercial litigation lawsuit

Category: Commercial Litigation

Business laws are designed to help protect and maintain a fair and free marketplace. There are many parties which need to be protected. One of the most important parties that require protection from the law are common stockholders of corporations, since they are more vulnerable to abuse from corporate entities. However, Michigan corporations also have certain legal rights which may need to be defended in a commercial litigation lawsuit.

This is what recently happened with the acquisition of Michigan-based company Kaydon Corp. A foreign company, AB SKF, had offered to purchase the company for $1.25 billion, which is equivalent to 33 million shares priced at $35.50 per share. However, problems arose when a federal lawsuit was filed by stockholders seeking an injunction against AB SKF’s acquisition of Kaydon. The lawsuit, which could potentially become a class-action case, alleged that Kaydon breached its fiduciary duty to its stockholders.

The lawsuit alleges that Kaydon and its executives have violated the federal Exchange Act of 1934. However, the parties seemed to have reached an agreement recently regarding the dispute over disclosures to stockholders. Kaydon has agreed to provide specified supplemental disclosures to the plaintiff stockholders. In return, the plaintiffs have agreed to withdraw their request for a preliminary injunction, therefore allowing the acquisition to move forward.

On the other hand, not all commercial litigation disputes in Michigan can be settled outside of the courtroom. In those circumstances, legal proceedings may move forward through the court system, even while negotiations continue between the parties. When no accord is foreseeable, the parties will be put to their proof before a judge, based upon the facts established and applicable laws.

Source: Crain’s Detroit Business, Shareholder lawsuit in $1.25B sale of Kaydon Corp. nears resolution , Chad Halcom, Oct. 8, 2013

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