No company likes to be constantly visiting the courts in order to discuss the different lawsuits to which it may be exposed, especially if they come from its own shareholders. Tilray Brands wanted to settle after an investor sued it, who was alleging that its popular marijuana stock “breached fiduciary duties, unjust enrichment and waste of corporate assets, and violations of the Securities Exchange Act of 1934.” The legal action was resolved through a settlement approved by the Delaware Court of Chancery.
A $39.9-million settlement that would resolve the shareholder derivative suit was recently approved by the Delaware Court of Chancery. Part of the agreement indicates that Tilray will also pay $6.5 million in attorneys’ fees and expenses to the plaintiffs’ counsel.
The complaint stated that the first category of misrepresentations related to the value of Tilray’s inventory and its gross margins. On the other hand, the second category of misrepresentations related to the entry into and value of the company’s agreement with Authentic Brands Group (ABG). According to the plaintiff, the latter deal was made in order to prop up the stock price that, in reality, was not as good as Privateer’s founder, Tilray’s originator, Brendan Kennedy, had previously claimed.
The complaint was “substantially similar to the other derivative complaints filed in the [Southern District of New York] and the District of Delaware, which are stayed pending the outcome of the securities class action motion to dismiss,” a Tilray spokesperson said recently. In addition, the company was alleging that the claims underlying these actions were not actually meritorious.