A proposed settlement has been reached on behalf of holders of EchoStar common stock as of August 19th 2019 and who received shares of Class A common stock of Dish Network.
The action, started in the name of the City of Hallandale Police & Firefighters Retirement Trust (based in Florida) and with Charlie Ergen and other EchoStar and Dish executives as defendants, sees a proposal filed with a potential agreement in a Las Vegas, Nevada district court.
The proposed settlement, which will be determined in a hearing on December 6th, sees $21 million in cash suggested to be distributed amongst claimants.
The initial Action challenged Ergen’s conduct in connection with EchoStar’s August 19th 2019 sale of the majority of its satellite services business to Dish. Lawyers Kessler Topaz alleged that Ergen orchestrated the Transaction for an unfair price, paying EchoStar shareholders Dish stock worth approximately $700 million less than the fair value of the assets sold, to benefit Dish at EchoStar shareholders’ expense. The action also includes claims that EchoStar’s CEO and CFO aided and abetted Ergen’s conduct.
Under Nevada law it could be held that a common-law breach of fiduciary duty could be mounted against a controlling stockholder.
The December 6th hearing will determine whether
(i) the terms and conditions of the Settlement are fair, reasonable and adequate to the Class, and should therefore be approved;
(ii) the proposed Plan of Allocation for the proceeds of the Settlement is fair and reasonable and should be approved;
(iii) a judgment should be entered granting a release of all of the Released Claims against the Released Parties and dismissing the Action with prejudice as against the Defendants;
(iv) the Fee and Expense Application and the request for an incentive award for Plaintiff should be approved.