Gardy & Notis, LLP has been appointed by the Court as lead counsel for shareholders of The Student Loan Corporation challenging a series of conflicted proposed transactions through which Citibank, N.A. -- Student Loan's controlling shareholder with 80% of Student Loan's common stock -- engineered a breakup of Student Loan's assets to rid itself of non-core banking assets at the expense of Student Loan's public shareholders. The case alleges that the underpriced transactions are being foisted on Student Loan's public shareholders because Citibank, N.A. and its corporate parent, Citigroup Inc., are desperately trying to raise cash and divest non-core banking assets in the short term. Through the transactions, CBNA and Citigroup will unload nearly $40 billion in student loans from its books and take in $1.8 billion in cash. However, Citibank/Citigroup's self-interested needs to satisfy orders from regulators to downsize, raise cash and focus on its core consumer banking business has harmed Student Loan's public shareholders, as the transactions will cashout shareholders at just $30 per share, representing a discount to the Company's book value.
Following expedited proceedings and document and deposition discovery, Gardy & Notis, LLP on December 23, 2010 achieved a settlement of the case whereby Citigroup agreed to pay an extra $2.50 per share to Student Loan's public shareholders, representing an 8.3% increase from the $30 per share that had been agreed to by Student Loan's board of directors.
On October 27, 2011, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery approved the settlement in all respects. Vice Chancellor Laster noted in his ruling that:
• "I think this is, as Mr. Notis suggested -- I find myself agreeing with him a lot today -- an excellent settlement for the class, and I commend the plaintiffs for achieving it."
• "[I]t is truly rare for plaintiffs to be able to achieve an increase over the price obtained by the special committee. I was trying to -- has it actually ever happened or is this the first time?"
• "It's certainly rare and commendable. I would like to think that it evidences the fantastic job that special committees are doing. But we all know that there's some suspicions that it may represent other dynamics. So it's very nice to see plaintiffs triaging a case, believing it has real merit, and pressing forward in a manner that gets incremental consideration."
The case is In re The Student Loan Corporation Litigation, Consolidated C.A. No. 5832-VCL, Delaware Court of Chancery.