Chimicles & Tikellis LLP Secures $72 Million Settlement For W2007 Grace Preferred Shareholders

Jan 08, 2016, 16:07 ET from Chimicles & Tikellis LLP

MEMPHIS, Tenn., Jan. 8, 2016 /PRNewswire/ -- Chimicles & Tikellis LLP of Haverford, PA announces that W2007 Grace Acquisitions I, Inc. will pay $72 million to settle claims brought on behalf of current and former preferred shareholders alleged to have been mistreated by W2007 Grace and certain affiliates. The preferred shareholders, who once held interests in a publicly-traded real estate investment trust (REIT) known as Equity Inns, Inc., stopped receiving dividends and financial information after Equity Inns was taken private in 2007 and renamed W2007 Grace. The U.S. District Court for the Western District of Tennessee approved the class settlement by Order, dated December 4, 2015, which became final and non-appealable on January 4, 2016.

This class settlement has many unique features. It provides W2007 Grace preferred shareholders with a liquidity event in the form of a merger that was approved by shareholders in July 2015. The settlement merger provides a recovery of $26 per share, or $62 million, and is expected to be consummated promptly after all conditions have been satisfied. Because the settlement provides for a merger, shareholders could opt out or seek appraisal, though no shareholder pursued either option. This merger was negotiated on the heels of a proposed sale of W2007 Grace's assets to a third party, but class counsel ensured that the settlement would not be contingent on the closing of that transaction.

The settlement also provides for the creation of a $6 million settlement fund to benefit former preferred shareholders who sold shares at a loss, which was allegedly caused by their limited access to financial information.

Notably, no shareholder's recovery will be reduced by legal fees. The Court approved the unopposed request for $4 million in fees and litigation expenses to be paid by W2007 Grace. W2007 Grace will also pay certain administration expenses. Finally, the Court concluded that each named plaintiff's significant assistance to the prosecution of this action warranted a contribution award for each named plaintiff.

"We felt compelled to help W2007 Grace's preferred shareholders who for years had been denied material benefits of owning preferred interests in what was once a publicly-traded REIT. Public companies should not be allowed to go dark and turn their backs on shareholders," said Nicholas E. Chimicles, Senior Partner of Chimicles & Tikellis. "We launched an aggressive litigation strategy that led us to the negotiation table after eleven months where we positioned sellers and current preferred shareholders to achieve this significant result. We are pleased with the outcome which ends an eight-year shareholder battle with W2007 Grace," concluded Mr. Chimicles. The litigation team also includes Kimberly Donaldson Smith and Catherine Pratsinakis of Chimicles & Tikellis and Van D. Turner of Hagler Bruce & Turner, PLLC of Memphis, Tennessee. The case caption is Johnson v. W2007 Grace Acquisition I, Inc., 2:13-cv-2777 (USDC W.D. Tenn).

Catherine Pratsinakis, Esquire
Chimicles & Tikellis LLP
361 W. Lancaster Ave.
Haverford, PA 19041
(610) 642-8500


SOURCE Chimicles & Tikellis LLP