Bankrupt athletic equipment maker Performance Sports Group on Friday reached a $3.6 million deal with a pension fund suing the company for allegedly misleading investors, putting to rest a dispute that had threatened to derail the debtor's pending Chapter 11 plan in Delaware bankruptcy court.
The Plumbers and Pipefitters National Pension Fund, a former shareholder of the debtor, is the lead plaintiff in a proposed class action in New York federal court that named Performance Sports before its bankruptcy and is currently proceeding against the company's former CEO and CFO. Earlier this month, the union demanded to be given a role in the bankruptcy but Performance Sports balked, fearing the entry would upset a delicate settlement reached with the case's two officially appointed committees that would allow unsecured creditors to receive a 100 percent recovery.
Under the terms of Friday's deal, the proposed class in the union suit will be certified in the bankruptcy case, and the union has agreed to then vote in favor of a new Chapter 11 plan that reflects those terms. The union will also receive $1.15 million upfront in cash and will be entitled to share in the proceeds from a third-party litigation trust that will likely go after some of the same directors and officers named in the union's suit, up to $2.5 million.
"I think it's a very good result for the class," Carol Gilden of Cohen Milstein Sellers & Toll PLLC, lead counsel for the union and the class, told Law360. "It settles a very hotly disputed matter and it establishes the class, which consists of defrauded shareholders, and gives them the right to share in the assets of estate."
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