May 23, 2016
[Revised: June 16, 2016]
Cadwalader scored a decisive victory for client Ashford Hospitality Prime, Inc. in its battle with activist hedge fund Sessa Capital. A May 20, 2016, decision by a federal judge in Dallas enjoined Sessa from soliciting proxies and determined that Ashford has a substantial likelihood of succeeding on its claims, which are predicated on Sessa having violated the U.S. securities laws and Ashford’s bylaws. The decision effectively ends a months-long proxy contest for control of Ashford Prime’s board. The current board will remain in control of the company.
Cadwalader has been advising Ashford Prime in connection with the proxy contest against Sessa and in litigation with Sessa in multiple jurisdictions culminating in this decision. Cadwalader is unique among leading law firms in that it has broad experience successfully advising both boards of directors and shareholders in shareholder activism matters.
The ruling is the first time a court has invalidated an activist shareholder’s slate on the basis of the activist’s failure to comply with the substantive disclosure provisions of a company’s advance notice bylaws. The court determined that Ashford had a substantial likelihood of succeeding on its claims predicated on Sessa having violated Ashford Prime’s bylaws and the proxy rules by failing to disclose its plans and proposals for the company, and that the board’s decision to reject the Sessa nominees was protected under the business judgment rule in Maryland, where Ashford Prime is incorporated. The court declared that Sessa’s slate of nominees was invalid and ineligible to stand for election and enjoined Sessa from further proxy solicitation in support of its nominees. Ashford Prime announced the conclusion of the proxy battle in an announcement on May 23, 2016. A copy of the court’s decision is available here.
Cadwalader partners Richard Brand and Martin Seidel led the Cadwalader team for Ashford Prime on corporate and litigation matters, respectively.
Howard Hawkins, Mark Ellenberg, Michele Maman, Thomas Curtin, Elizabeth Ruocco
Scott Cammarn, Jonathan Watkins, Mark Chorazak, Aaron Lang
On 7 June 2019, Regulation (EU) 2019/876 (CRR II) was published in the Official Journal of the EU.