According to a press release dated November 29, 2011, the Complaint charges the defendants with violations of the federal securities laws.
On April 29, 2011, the Company and its wholly-owned subsidiaries filed voluntary petitions for reorganization under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. As a result of the Company’s filing for protection under the Bankruptcy Code, it has not been named as a defendant.
The Complaint names certain of the Company’s current and former directors and officers as defendants. The Complaint alleges that the Defendants failed to disclose material adverse facts regarding the Company’s Thermo No. 1 geothermal plant. Unbeknownst to the investment community, soon after it was completed, the Thermo No. 1 geothermal plant evidenced material design deficiencies and use of inefficient recirculation pumps. In addition, heat transfer could not be implemented successfully because of an inadequate testing of well field temperature and an inadequate test of well flow prior to construction. As a result, by approximately June 2009, Defendants knew that the Thermo No. 1 geothermal plant could not raise its output above a net level of approximately 6.6 megawatts and, at this level, it was impossible for the Thermo No. 1 geothermal plant to operate at a profit or for the cost of the plant to be recovered through ongoing operations. Accordingly, for accounting purposes, the Thermo No. 1 geothermal plant was impaired.
Had the Company properly recognized its impairment losses throughout the Class Period: (i) Plaintiff and the Class would have been made aware of the fact that the Thermo No. 1 geothermal power plant was incapable of generating cash sufficient to recover its carrying value, and (ii) the Company’s balance sheet would have reflected the fact that liabilities materially exceeded assets and that, accordingly, the Company was in a technical state of bankruptcy, which might have triggered adverse actions by the Company’s creditors. The Plaintiffs claim Defendants’ failure to disclose the existence of the design deficiencies that limited Thermo No. 1’s output, and Defendants’ material overstatement of the carrying value of Thermo No. 1, caused the market price of Raser’s common stock to be artificially inflated during the Class Period.
On March 1, 2012, the Court issued an Order appointing Lead Plaintiff and approving the selection of Lead Counsel.
On April 30, 2012, the Plaintiffs filed an amended class action complaint.
On April 23, 2013, the Court issued an Order granting the Defendants' motion to dismiss. Plaintiffs were given leave to file an amended complaint. Plaintiffs did not file, thus the Court dismissed this case with prejudice on May 13.