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Jul 29, 2023

This Week in Chancery Court: $4.5 Billion Earthstone Energy Sale

An investor challenging Earthstone Energy Inc.'s $280 million financing transaction with its largest stockholder, EnCap Investments LP, filed an emergency motion to fast-track the case following news

An investor challenging Earthstone Energy Inc.'s $280 million financing transaction with its largest stockholder, EnCap Investments LP, filed an emergency motion to fast-track the case following news that Permian Resources is set to acquire the oil and gas company for $4.5 billion.

Here are some highlights from the court’s calendar for the upcoming week:

Tuesday: Assad v. EnCap Inv. LP, No. 2022-0786, oral argument 8/29/23.

At issue: The lawsuit by an Earthstone investor accuses EnCap and its affiliates on the board of engineering a suspiciously discounted financing deal as part of the energy company’s $860 million acquisition of another firm. After news of Earthstone’s planned sale to Permian Resources broke Aug. 21, the shareholder, George Assad, asked Vice Chancellor Paul A. Fioravanti Jr. to expedite the dispute so it can be fully litigated before the transaction goes through, undermining his standing as an investor. Fioravanti, who’s already weighing a request to dismiss the case, promptly scheduled a hearing on Assad’s motion.

Court action: Telephonic oral argument on Assad’s motion to expedite.

EnCap, Earthstone Sued Over $860 Million Bighorn Permian Deal

Wednesday: Neem Int’l CV v. Shulman, No. 2022-0187, oral argument 8/30/23.

At issue: Ukrainian businessman Vadim Shulman is facing litigation led by an offshore investment firm over claims he looted Pathway Genomics Corp.—now called OmeCare—while boardmembers including former heavyweight boxing champion Wladimir Klitschko and former Joint Chiefs of Staff chairman Peter Pace looked the other way. Vice Chancellor Nathan A. Cook will consider a bid by the investment firm, Curaçao-based Neem International CV, for documents allegedly being held back by Shulman. According to Neem’s motion, Shulman “is well-aware of the court’s expectations” thanks to his involvement in an unrelated lawsuit accusing Ukrainian oligarchs Igor Kolomoisky and Gennadiy Bogolyubov of looting PrivatBank—which was later nationalized—and laundering millions through an Ohio steel plant.

Court action: Oral argument over Zoom on Neem’s motion to compel.

Joint Chiefs Ex-Chairman Named in Pathway Genomics Investor Suit

Thursday: Enhabit Inc. v. Nautic Partners IX LP, No. 2022-0837, oral argument 8/31/23.

Hospice care company Enhabit Inc. filed a lawsuit last year accusing Nautic Partners LLC and Vistria Group LP of conspiring with its ex-CEO to raid its workforce and build a rival business after Enhabit rejected their buyout offer. The company now claims the two private equity firms are withholding certain files and excessively redacting others based on improper assertions of attorney-client privilege. Vice Chancellor Lori W. Will is set to hear arguments on Enhabit’s motion seeking to force them to hand over additional evidence.

Court action: Oral argument in Wilmington, Del., on Enhabit’s motion to compel.

Enhabit Accuses Private Equity Firms of Backing Executive Raid

Friday: Parks v. Horizon Holdings LLC, No. 2021-0988, oral argument 9/1/23.

At issue: Members of the family that founded Blue Wave Boats sued Horizon Holdings LLC in 2021, claiming the investment firm duped them into a financing deal with lofty false promises, then wrongfully forced them out of the boat building business. Vice Chancellor Sam Glasscock III will hear arguments on a motion by Horizon for a default judgment or other sanctions based on allegations that brothers Richard and Steven Parks “spoliated,” or destroyed, documents they were required to turn over. Horizon has also countersued the Parkses.

Court action: Oral argument in Georgetown, Del., on Horizon’s motion for sanctions.

Blue Wave Boats Founder Family Sues Horizon Holdings Over Ouster

To contact the reporter on this story: Mike Leonard in Washington at [email protected]

To contact the editor responsible for this story: Carmen Castro-Pagán at [email protected]

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