According to the press release dated May 6, 2010, Heckmann is a holding company originally organized as a special purpose acquisition company for the purpose of acquiring or acquiring control of one or more operating businesses through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination. On May 20, 2008, the Defendants announced that the Company had entered into an agreement to acquire China Water for an aggregate purchase price of $625 million. In order to consummate the Merger - which required the vote of the majority of Heckmann's public stockholders - the Defendants issued a Joint Proxy on October 2, 2008 which solicited the approval of Heckmann's stockholders of the transaction.
The Complaint alleges that the Joint Proxy contained material misstatements and omitted material information. In particular, the Defendants recommended that shareholders approve the transaction because China Water was as an attractive acquisition target that would provide Heckmann stockholders "with an opportunity to merge with, and participate in, a company with significant growth potential." In support of this recommendation, the Joint Proxy contained detailed reported, pro forma and projected financial data for Heckmann and China Water which was purportedly the product of Heckmann's "extensive due diligence review of China Water and its business and operations." These statements were materially misleading and omitted material information regarding the value of China Water's assets and its financial condition. As a result of the material misstatements and omissions in the Joint Proxy, the Merger was overwhelmingly approved by the Company's stockholders.
Investors began learning about the true financial condition of China Water beginning on May 8, 2009 when Heckmann disclosed financial results for the first quarter of 2009 and disclosed that the Company had recorded a net loss for the first quarter of $186.2 million, or $1.69 per share, which included a 184.0 million non-cash goodwill impairment charge associated with the assets of China Water. Revelations in the ensuing months continued to demonstrate the incomplete and misleading information provided to stockholders in connection with the Merger and the Merger's harmful effect on the Company.
According to the Order signed by Judge Mary Pat Thynge on August 12, 2010, Matthew Haberkorn was appointed lead Plaintiff and Barroway Topaz Kessler Meltzer & Check, LLP and Rosenthal, Monhait & Goddess, P.A. was approved as lead Plaintiff's selection of lead counsel. On October 8, 2010, the lPaintiff filed an Amended Class Action Complaint. The Defendants responded by filing motions to dismiss on December 10, 2010.
On September 29, 2011, Magistrate Judge Mary Pat Thynge issued a Report and Recommendation re Defendants’ motion to dismiss for lack of personal jurisdiction and Defendants’ motion to dismiss for failure to state a claim. According to the Order, it is recommended that: (1) Defendants motion to dismiss for lack of personal jurisdiction (DI 63) pursuant to F.R.C.P. 12(b)(6) be denied. (2)Defendants motion to dismiss for failure to state a claim (DI 63 and 69) under F.R.C.P. 12(b)(6), under F.R.C.P. 8 and 9, and pursuant to the Private Securities Litigation Reform Act and §§ 10(b), 14(a) and 20(a) of the Securities Act of 1934 be denied.
On May 25, 2012 the Court issued an Order adopting Magistrate Judge Mary Pat Thynge's Report; thus denying Defendant's motion to dismiss.
The parties entered into a Stipulation of Settlement on March 4, 2014. This Settlement was preliminarily approved on March 24. The Court issued Orders approving the plan of allocation, awarding attorneys' fees and expenses, dismissing the case with prejudice and entering Final Judgment on June 26. On May 13, 2015, the Court issued an Order authorizing disbursement of funds.
