According to the docket, on April 24, 2006, a motion for order provisionally closing the case and granting related relief was filed by the Co-Trustees of the AremisSoft Liquidating Trust. On April 28, 2006, U.S. District Judge Joel A. Pisano granted the motion and the civil case was terminated. Recently, on August 1, 2006, a motion to reopen the case, motion to enforce a settlement, and motion for permanent injunction was filed by a defendant.
On August 16, 2002, defendant PFK-UK filed a motion to dismiss the First Amended and Consolidated Complaint, which the Court denied in an Order entered on October 25, 2002. Defendant PFK-UK filed a motion for reconsideration. On November 20, 2002, the Court entered the Order dismissing the action with prejudice as to defendants Roth Captial Partners, LLC f/k/a Cruttenden Roth, Inc., Advest, Inc., C.E. Unterberg, Towbin, Value Investing Partners, BlueStone Capital Partners, L.P., ISG Capital Markets, LLC, John G. Kinnard & Co., Inc., Pennsylvania Merchant Group, R.M. Stark & Co., Inc., Trautman, Kramer & Co., Inc., First Security Van Kasper, and H.C. Wainwright & Co. On March 13, 2003, the Court granted in part and denied in part Defendant PFK-UK’s motion for reconsideration. On July 25, 2003, a Second Amended Consolidated Complaint was filed. On September 19, 2003, the Court entered the Final Judgment and Order dismissing the action with prejudice against defendants Noel R. Voice, M.C. Mathews, & Dr. Paul I. Bloom, Michael A. Tymvios, Kurt Sedlmayer a/k/a Kurt Sedlmeyer and Scott E. Bartel. On October 17, 2003, the plaintiffs filed a motion for entry of judgment as to defendant PFK-UK, which was granted in a Order entered on November 13, 2003.
On March 15, 2002, the plaintiffs filed a First Amended and Consolidated Class Action Complaint. With AremisSoft filing for relief under Chapter 11 of the United States Bankruptcy Code, the litigation was voluntarily settled. On March 22, 2002, a Stipulation and Agreement of Settlement with AremisSoft was filed. According to the Stipulation and Agreement of Settlement, AremisSoft has filed a pre-negotiated Plan of Reorganization. The Plan provides that the Settlement Class shall be entitled to receive in settlement of their claims against AremisSoft the following "Settlement Securities:" i) sixty and one-half percent (60.5%) of the common stock representing the equity and voting rights of SoftBrands, Inc. ("SoftBrands") (such amount shall represent no less than fifty percent (50%) of fully-diluted SoftBrands common stock); and (ii) ninety percent (90%) of the Net Trust Recoveries (as defined in the Plan). Those Class Members who elect to opt-out of the Settlement shall receive the same share of the sixty and one-half percent (60 .5%) of the common stock representing the equity and voting rights of SoftBrands as they would have received had they not elected to opt-out of the Settlement, however, they shall not receive any Beneficial Interests in the Trust under the Plan. SoftBrands is a Delaware Corporation and AremisSoft has transferred to SoftBrands all of the manufacturing and hospitality software businesses formerly held by AremisSoft. On August 1, 2002, the Court entered the Order and Final Judgment signed by U.S. District Judge Joel A. Pisano. According to the Order, AremisSoft Corp., SoftBrands, Inc., Dann V. Angeloff, George H. Ellis, Theodoros Fessas, H. Tate Hold, David G. Latzke, John Malamas, George Papadopoulos, Stan Patey and the successors are permanently enjoined from instituting, commencing or prosecuting, any and all claims that were or could have been asserted by the Released Person against Plaintiffs. On August 16, 2002, the Court entered the Corrected Order and Final Judgment. The case continued against the remaining defendants.
In a press release dated March 15, 2002, AremisSoft Corporation (Pink Sheets:AREM) filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey. The bankruptcy filing is to implement a plan of reorganization which will settle the securities class action plaintiffs' claims against AremisSoft. AremisSoft's filing is expected to have no effect on the operations of SoftBrands, the Company's wholly-owned subsidiary that provides enterprise software solutions. The proposed reorganization plan would provide that: -- All secured and unsecured claims approved by the Court will be paid in full; -- AremisSoft will contribute its litigation claims and certain other assets to a liquidating trust that will pursue those claims and liquidate the assets primarily for the benefit of securities class action plaintiffs; -- Securities class action plaintiffs will receive all of the beneficial interests in the liquidating trust but SoftBrands will be entitled to 10 percent of the distributions from the trust; -- Holders of AremisSoft common stock will receive 39.5 percent of the common stock of SoftBrands and securities class action plaintiffs will receive 60.5 percent of the common stock of SoftBrands.
The original Complaint alleges that defendants, AremisSoft and certain of its officers, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. At the start of the Class Period, on December 17, 1999, defendants issued a press release announcing that AremisSoft had been awarded a contract by the National Health Insurance Fund of Bulgaria to utomate the national healthcare system of Bulgaria and that the contract was valued at $37.5 million (the "Bulgarian Contract"). Following this announcement, and throughout the Class Period, defendants highlighted the Bulgarian contract and its value in the Company's press releases and public filings. Towards the end of the Class Period, however, questions began to be raised concerning the value of the Bulgarian Contract. Finally, on May 17, 2001, an article in the New York Times reported that officials of the World Bank and Bulgaria indicated that the value of their contract with AremisSoft is for less than $4 million, a far cry from the $37.5 million value that defendants attributed to the contract. Additionally, during the Class Period, defendants Poyiadjis and Kyprianou created blind trusts naming their families as beneficiaries and transferred 4.8 million shares, as well as options for 5.8 million shares, into them. As reported in a March filing with the Securities and Exchange Commission, the shares in the blind trusts have been sold and the options exercised and sold.
The complaint further alleges that in response to the New York Times article and the serious questions raised therein concerning the value of the Bulgarian Contract, trading in the shares of AremisSoft were halted on May 18, 2001, until late afternoon, when AremisSoft issued a press release concerning the Bulgarian Contract and in effect admitted that its prior representations concerning the Bulgarian Contract had been misleading as the Company had not disclosed that AremisSoft had only won a small portion of the overall contract to automate the Bulgarian national healthcare system and that the Company would have to engage in competitive bidding for the remainder of the contract. When trading in AremisSoft stock reopened the price declined from $13.28 per share to $11.98 per share - a decline of 9.8% and a 35% decline from $18.47 per share, the price at which AremisSoft common stock was trading prior to the rumors concerning the value of the Bulgarian Contract began to filter through the market.