November 10, 2003

Threat Of Bankruptcy Lowers Corel Settlement Value

The court has approved the proposed $7 million settlement in the securities class action against Corel Corp., the Candian company that manufactures WordPerfect.

As posted in The 10b-5 Daily last August, plaintiffs offered a number of justifications to the court for the relatively low settlement amount (about 15% of the alleged damages), including Corel's poor financial position and the defendants' threat to seek refuge in Canadian bankruptcy court in the event of a judgment against them. Judge Brody of the E.D. of Pa. appears to have accepted these arguments. (See this article in The Legal Intelligencer (available via law.com - free registration req.)).

Quote of note: "'Throughout this litigation, defendants have maintained that if judgment is entered against them, they will seek the protection of the Canadian bankruptcy court. If this were to occur, there would be a significant question regarding whether or not Corel's insurance policies would still be available to fund a judgment for plaintiffs,' Brody wrote."

Addition: Judge Brody's opinion approving the settlement can be found here. (Thanks to Adam Savett for the link.)

Posted by Lyle Roberts at November 10, 2003 5:01 PM | TrackBack
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