Steel Connect, Inc. to Settle Class Action Lawsuit with Proposed Settlement

Steel Connect, Inc. (NASDAQ: STCN) has recently disclosed its involvement as a nominal defendant in the Reith v. Lichtenstein class and derivative action. The action, filed in Delaware Court of Chancery, alleged breach of fiduciary duty and aiding and abetting breach of fiduciary duty claims against certain current and former directors of the company, as well as certain stockholders. The litigation was related to the acquisition of Series C Convertible Preferred Stock and equity grants made to specific individuals in 2017.

As of April 8, 2024, Steel Connect, together with other parties involved, entered into a memorandum of understanding contemplating the settlement of the litigation. Following this, on October 18, 2024, a Stipulation and Agreement of Compromise, Settlement, and Release was reached for the proposed settlement. A settlement hearing has been scheduled by the Court to consider the approval of the Proposed Settlement on December 13, 2024.

If approved by the Court, the Proposed Settlement entails significant actions. Defendants are to ensure a cash payment of $6,000,000 to the company, which, after certain deductions, will be distributed to common stockholders. Additionally, amendments will be made to the Stockholders’ Agreement and changes will be implemented in corporate governance policies and practices to enhance processes and board independence.

Key highlights of the Proposed Settlement also include the waiver of distribution rights by certain investors, directors, and officers, the adoption of enhanced corporate governance practices, and the proposed dismissal with prejudice of the Reith litigation.

For further insights into the terms of the Proposed Settlement and information regarding the December 13, 2024 hearing, interested parties are encouraged to review the Stipulation and the Notice of Pendency and Proposed Settlement of the Derivative and Class Action. These documents are available on Steel Connect, Inc.’s investor relations website.

This report outlines the major developments in the ongoing legal matter involving Steel Connect, Inc. and its resolution through the Proposed Settlement. The Company encourages interested parties to thoroughly review the details provided regarding the upcoming settlement hearing and the terms of the agreement.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Steel Connect’s 8K filing here.

Steel Connect Company Profile

Steel Connect, Inc, together with its subsidiaries, provides supply chain services in the United States, Mainland China, Netherlands, and internationally. It offers product configuration and packaging, kitting, and assembly of components and parts into finished goods; and value-added processes, such as product testing, radio frequency identification tagging, product or service activation, language settings, personalization and engraving, multi-channel packaging, and packaging design services.