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Wilmington Trust is in the crosshairs of another lawsuit challenging its role in a company’s decision to transfer corporate ownership to its workers through an employee stock ownership plan ( Guidry v. Wilmington Tr., N.A. , D. Del., No. 1:17-cv-00250, complaint filed 3/10/17 ).
The proposed class action, filed March 10 by a former employee of Texas oil transporter Martin Resource Management Corp., accuses Wilmington of orchestrating a transaction that allowed Martin shareholders to unload their stock at inflated prices by transferring it to an ESOP established as a retirement savings vehicle for Martin employees. Through the ESOP, the Martin workers overpaid for the company’s stock by more than $185 million, the lawsuit claims.
Wilmington, a subsidiary of M&T Bank, is no stranger to litigation over ESOP transactions. The company went to trial in 2016 over allegations it mishandled an $81 million deal involving the ESOP connected to government security contractor Constellis Group Inc. Wilmington was sued in January over its role in a $98 million stock deal involving the ESOP of piping distributor ISCO Industries Inc.
In this case, the employee claims the ESOP paid more than $375 million for stock that gave it a controlling interest in Martin. Shortly after the transaction closed, that stock was valued at about $190 million by an independent appraiser, the lawsuit claims.
Moreover, the ESOP paid a “control premium” on the stock—a higher price that accounts for obtaining a majority interest in a corporation—without actually obtaining control over Martin’s board of directors, the lawsuit alleges.
The lawsuit was filed in the U.S. District Court for the District of Delaware by Bailey & Glasser LLP, which also represents the workers suing Wilmington over the ISCO and Constellis stock plans.
Wilmington didn’t respond to Bloomberg BNA’s request for comment.
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Text of the complaint is at http://www.bloomberglaw.com/public/document/Guidry_v_Wilmington_Trust_NA_Docket_No_117cv00250_D_Del_Mar_10_20.
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