Corporate officials and board members in California and across the country have a responsibility to act in the best interests of a company and its shareholders as part of their fiduciary duties. When they fail to do so, shareholders and others directly affected can challenge their actions in court. In one such case, a shareholder in a large media company is pursuing a lawsuit against Media News Group Enterprises and the New York-based hedge fund that owns it, Alden Global Capital, claiming that they have breached their fiduciary duty.
The shareholder, a company known as Solus, owns around 24 percent of the voting shares of stock in the news company that runs over 50 daily newspapers in various U.S. cities, including the Denver Post. On the other hand, Alden owns 50.1 percent of the shares in Media News Group. The Solus lawsuit claims that the news company invested $10 million in an Alden-affiliated real estate investment fund in December 2014.
In addition, the lawsuit claims that decisions made by the news company’s management and Alden officials have demonstrated a lack of transparency, including the creation of a holding company in a 2016 restructuring and the creation of a new stockholders’ agreement in 2017 that removed corporate obligations to report additional details to shareholders. Solus claims that these changes eliminated transparency about major financial decisions, specifically around trading involving Alden’s other investment efforts and activities.
A company has an obligation to protect its value for all of its shareholders, not only large or majority stockholders. People who are investors in a company and are concerned that material harm is being done to the company and its shareholders, as a result, can speak to a business litigation attorney. A lawyer may be able to advise as to the next actions that can be taken in order to prevent or stop a breach of fiduciary duty at a corporate level.