A fire can devastate any business. For large public companies, events like fires complicate business matters immensely and often lead to litigation arising from the after-effects. Venator, a chemical manufacturing company, is currently facing a lawsuit brought by the company’s shareholders claiming the company and certain officers and directors violated federal securities laws by misleading shareholders about the damages to its business prospects caused by a fire.
In January 2017, flames engulfed one of the company’s most important plants. The damage was severe, and shareholders claim the company did not disclose the true extent of the fire in either its August 2017 Initial Public Offering (IPO) or its December 2017 secondary offering. According to the lawsuit, the facility repair costs exceeded $1 billion, making the plant a total loss. But the cost of repairs was not the only financial consequence of the fire. The company lost 80% of its manufacturing capacity when the plant became unusable. By December 2018 Venator’s share price was down 81% or more from the August IPO and December offering prices. The suit alleges that Venator failed to properly inform shareholders of the extent of the fire and the financial consequences of it. The allegations expose the company to serious legal consequences for federal securities law violations.
The relationship between companies and their shareholders is extremely delicate. Companies must disclose material information to shareholders, but not every negative or positive piece of information is material. Every disclosure risks affecting a public company’s stock price. Both shareholders and companies need experienced lawyers to properly investigate allegations of securities law violations. Every shareholder lawsuit is different: some will be decided in a courtroom while most will be resolved around the negotiation table. Because of the significant business interests involved in these matters, getting a fair, just and right type of resolution is important.
At Burford Perry LLP, our Houston shareholder rights attorneys understand the nuances of securities laws, and we work with both shareholders and companies facing litigation. With innovative strategies and aggressive representation, we can provide efficient and complete representation. Contact us today to schedule an appointment with one of our shareholder rights attorneys.