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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
fi-9 F- IN AND FOR NEW CASTLE COUNTY
STIRLING INVESTMENT HOLDINGS, INC., on
behalf of itself and derivatively on behalf of
GLECNOIT UNIVERSAL, LTD.., a Delaware
corporation, and GLENOIT CORPORATION,
a Delaware `corporation, and ISAAC SCHAPIRA,
Plaintiffs.,
V. C.A.No. 1% \ Tad'
M. SALEEM MUQADDAM, THOMAS J.
O'GORMA-N, JOHN M. O'MARA, JOSEPH
SILVESTRI, CITICORP VENTURE CAPITAL,
LTD., a New York corporation, CITICORP
MEZZANINE III, L.P., a Delaware limited
partnership, GLENOIT UNIVERSAL, LTD., a
Delaware corporation, and GLENOIT
CORPORATION, a Delaware corporation,
Defendants.
COMPLAINT
Stirling Investment Holdings, Inc. ("Stirling") and Isaac Schapira, by
undersigned counsel, for their complaint allege upon knowledge as to themselves and
actions and upon information and belief as to all other matters as follows:
Nature of the Action
1. In 1995, Plaintiff Stirling sold Glenoit Universal, Ltd.
Delaware holding corporation, and its wholly owned Delaware operating subsidiary Glenoit
Corporation ("Glenoit" or the "Company") to defendant Citicorp Venture Capital, Ltd.
in a leveraged recapitalization. Stirling retained approximately 15% of Universal's
Stirling and its affiliates (collectively, "Stirling") received, among other things,
Universal with an aggregate initial face amount of over $10 million.
SNIPPETS:
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
STIRLING INVESTMENT HOLDINGS, INC., on behalf of itself and derivatively on behalf of
Stirling Investment Holdings, Inc. and Isaac Schapira, by their
Corporation to defendant Citicorp Venture Capital,
CVC and its designees on the Glenoit and Universal Boards are now
well in excess of $100 million a.fter the recapitalization, CVC is proposing to award itself
an 18% loan from a CVC affiliate, defendant Citicorp Mezzanine III, L.P., a Delaware limited
The recapitalization violates CVC's fiduciary duties to Stirling as senior
misappropriating from Universal the opportunity to pay off Glenoit's junk bonds at a deep
Defendant M. Saleem Muqaddam has served as a Vice President of
Defendant Citicorp Mezzanine is a Delaware limited partnership affiliated
Gratch, was pursuing a possible acquisition by Glenoit of Barth & Dreyfuss, a company which
and which had subsequently filed for bankruptcy protection,
willing to take part of the purchase price in the form of long term notes,
creditor in a transaction with a party it trusted.
In his deposition given in connection with the committee's motion for partial summary
What is consistent in both witnesses' testimony is that CVC intended to enhance CVC's g,oals,
initial principal amount of over $10 million, issued CVC approximately 80% of Universal's new
The Stockholders Agreement sets the number of directors for Universal
Only a year after Stirling sold control of Universal to CVC,
for APE's stock, extinguished approximately $16.6 million of APE indebtedness, paid
The "Joint Consent" was to be signed by the directors
CVC's position as a significant creditor and majority owner of has resulted in it having a
Plaintiffs repeat and reallege the preceding paragraphs as if fully stated
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