According to the Company’s FORM 10-K For The Fiscal Year Ended December 31, 2002, on December 18, 2002, the Third Circuit affirmed the lower court's order dismissing the case with prejudice. On December 30, 2002, the plaintiffs filed a petition for rehearing with the Third Circuit, however, such petition was denied on January 14, 2003.
As summarized by the same SEC filing, an Amended Class Action Complaint was filed on November 15, 2000, alleging that certain current and former officers and directors of the company and the company's principal lenders, Cerberus Partners, L.P., Foothill Capital Corporation and Goldman, Sachs & Co., implemented a scheme to perpetrate a fraud upon the stock market regarding the common stock of CHC. A Second
Amended Class Action Complaint (the "Second Amended Complaint") was filed on
March 21, 2001, which removed all of the officers and directors of the company as defendants, except for the company's former Chief Executive Officer and a former member of CHC's Board of Directors, and continued to name Cerberus Partners, L.P., Foothill Capital Corporation and Goldman, Sachs & Co. as defendants. The plaintiffs' purported class action suit alleges that the defendants artificially depressed the trading price of the company's publicly traded shares and created the false impression that stockholders' equity was decreasing in value and was ultimately worthless. The plaintiffs further allege that members of the class sustained total investment losses of $50 million or more. On June 14, 2001, a third Amended Class Action Complaint (the "Third Amended Complaint") was filed naming the same defendants as the Second Amended Complaint. The plaintiffs' allegations in the Third Amended Complaint were substantially similar to the allegations in the Second Amended Complaint; however, the Third Amended Complaint eliminated references to the corporate assets of the company. All defendants moved to dismiss the Third Amended Complaint for failure to state a claim upon which relief can be granted and, in connection therewith, on May 6, 2002 the presiding judge granted the defendants' motion to dismiss, with prejudice and also denied plaintiffs' request for leave to replead. The plaintiffs filed a timely appeal to the United States Court of Appeals for the Third Circuit (the "Third Circuit") and filed their brief in support of their appeal with that court on July 24, 2002. The defendants filed their opposition brief on August 23, 2002 and the plaintiffs filed a reply brief on September 20, 2002.
The original Complaint alleges that the defendants perpetrated a fraud upon the market for shares of Coram common stock, by circulating materially false and misleading statements and/or omissions in press releases and otherwise, designed to artificially deflate the market price of Coram stock, in furtherance of a plan designed to deprive its stockholders of the value of their equity in the said stock, and provide for Coram's emergence from bankruptcy proceedings as a privately held company, depriving plaintiffs and the proposed class of Coram stockholders of fair compensation for the value of their Coram common stock.
The Complaint names as defendants three entities holding long-term indebtedness of Coram in the approximate amount of $260 million, including Cerberus Partners, L.P., Goldman, Sachs Credit Partners, L.P., Foothill Capital Corporation, (collectively the Lender Defendants), and the present and former officers and directors of Coram, and of the Lender defendants or their affiliates, who participated in the alleged scheme of securities fraud which forms the basis for the action. Coram itself is not named as a defendant as it is or was the subject of bankruptcy proceedings.