A New York federal judge awarded more than $4.8 million in fees to Cohen Milstein Sellers & Toll PLLC, granting a request by the attorneys who secured a class action settlement between investors and former executives of the bankrupt Performance Sports Group Ltd. after nearly seven years of litigation.
U.S. District Judge Gregory H. Woods gave final approval Monday to a $13 million settlement and said the lead counsel for the plaintiffs was entitled to 28% of it, plus 28% of a bankruptcy fund that benefits investors in the defunct athletic gear manufacturer and $855,000 for the firm's expenses, according to two orders issued in the Southern District of New York.
"The fee sought by lead counsel has been reviewed and approved as fair and reasonable by the court-appointed lead plaintiff, a sophisticated institutional investor," Judge Woods wrote. "No settlement class member has objected to the fee application."
The United Association National Pension Fund sued PSG, its former CEO Kevin Davis and former CFO Amir Rosenthal in May 2016, seeking class status on its claims of Exchange Act violations. The class members today are about 19,000 investors who purchased the company's common stock between January 2015 and October 2016, the month PSG filed for bankruptcy in Delaware.
The lawsuit accused PSG and its executives of misleading investors about the impact of certain market conditions on the company's value, such as the consolidation of seven large customers into five companies and the bankruptcy of Sports Authority Inc. The plaintiffs alleged that PSG also pressured retailers to increase their order sizes to improve quarterly profits, which ultimately caused a drop in demand and stock price.
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The $4.8 million fee award represents slightly less than 60% of the total estimated cost of the litigation, according to Cohen Milstein's request. The settlement will be funded by PSG's directors and officers insurance policy.
The parties reached a settlement last year through JAMS arbitration.
"This was a hard-fought, highly contested matter. We're pleased with the outcome on behalf of investors," lead plaintiff's attorney Carol Gilden said Tuesday. "The claims administration process is currently ongoing. We anticipate it will be completed by late spring. At that time, we will seek court approval to distribute the proceeds from the district court settlement and the earlier bankruptcy settlement on a pro-rata basis to investors with valid claims."
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