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By Dawn McCarty and Phil Milford
Oct. 10 — Royal Bank of Canada was ordered by a Delaware judge to pay $75.7 million to shareholders of Rural/Metro Corp. in a lawsuit stemming from the company's $438 million buyout by private-equity firm Warburg Pincus LLC.
Delaware Chancery Court Judge J. Travis Laster today issued a 95-page opinion setting damages in the case. In March, Laster ruled that bankers at RBC Capital Markets misled the ambulance-operator's shareholders about its value to spur a speedy sale and garner fees.
“RBC perpetrated what the Delaware Supreme Court has described as ‘a fraud upon the board,'” Laster wrote. That typically involves “the failure of insiders to come clean,” he said.
Rural/Metro provides ambulance and firefighting services to about 700 communities in 21 states. Two years after buying the company, Warburg officials put it into bankruptcy to cut debt and smooth the way for a takeover by noteholders.
“We are reviewing the decision and are considering our options,” Kevin Foster, a spokesman for Toronto-based RBC, said in an e-mailed statement.
Laster said in his decision today that “RBC did not engage in criminal” conduct.
With assistance from Michael Bathon, Jef Feeley and Steven Church in Wilmington, Del.
The opinion is available at http://www.bloomberglaw.com/public/document/CONS_W_6489VCS__CONF_ORD_ON_DISC__IN_RE_RURAL_METRO_CORPORATION_S/2.
©2014 Bloomberg L.P. All rights reserved. Used with permission.
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