Worldspace: Class Action suit gets serious
August 23, 2010
by Chris Forrester
Worldspace, the struggling pay-radio operator, is facing another challenge, this time from investors who allege certain wrongdoings over the broadcaster’s IPO. Last week Judge Peter Walsh, who is supervising Worldspace’s Chapter 11 bankruptcy, ruled that Worldspace must hand over all and any documents that lawyers have demanded in the long-running Class Action against Worldspace and certain of its directors. The original request to the Delaware Bankruptcy Court was made back on June 18, and it would seem from the court filings that the various other lawyers, who had originally opposed the releasing of any further paperwork, this time made no objections.
The Class Action itself asks Worldspace and its chairman/CEO Noah Samara and others, for damages resulting from “violations of certain Federal securities laws, and the Securities Act 1933” and relate to Worldspace’s IPO, and the actual IPO Prospectus. On March 16 the Defendants in the action (Worldspace, Samara and others) asked that the Class Action be “stayed” pending the completion of the Worldspace sale process. In essence the Class Action alleges that Samara and others inflated Worldspace’s subscriber data prior to the August 4 2005 IPO. In a Motion before the Bankruptcy Court in March, the Lead Plaintiff in the Class Action asked the Court that it order that no Worldspace documents be destroyed, abandoned or otherwise rendered unavailable following the transfer to its new owners
The Class Action is being managed by Midtown Partners as lead plaintiffs. A hearing took place on July 16 between the various parties, and Judge Walsh, who subsequently ordered that the application to free up the log-jam of paperwork be granted. The court ruling is wide-ranging and allows for Midtown Partners a complete remit to examine just about anything they need. A filing on July 7 to the Delaware Bankruptcy Court stated bluntly that “[Worldspace’s] arguments have no merit”. The Class Action against Worldspace has been running for a number of years.
Worldspace, when it was resisting the application, argued that it has already allowed the Class Action lawyers access to 13,000 pages of documents. The Class Action lawyers in their turn argued that all the required documents are easily available on an existing disc, and should now be handed over for examination.