Class Action Lawsuit v Chelsey Direct and HNVD board
The attached complaint was filed this morning in the State of Delaware. Feel free to contact the attorneys. Emily Komlossy (954)630-1000 or Patricia Weiser (610)225-2677
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
__________________________________________
Glenn Freedman and L.I.S.T., Inc., on behalf of :
themselves and all others similarly situated, ::
Civil Action No.
Plaintiffs, ::
v. ::
Hanover Direct, Inc., Chelsey Direct, LLC, Stuart :
Feldman, William B. Wachtel, Wayne B. Garten, :
Paul S. Goodman, Donald Hecht, David Brown and :
Robert Masson, ::
Defendants. :
__________________________________________:
COMPLAINT
Plaintiffs, Glenn Freedman and L.I.S.T., Inc., by their attorneys, allege upon information and
belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows:
THE PARTIES
1. Plaintiffs Glenn Freedman and L.I.S.T., Inc. ("plaintiffs") are the owners of in excess
of 57,000 shares of common stock of Hanover Direct, Inc. (“Hanover" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein.
2. Hanover is a corporation duly existing and organized under the laws of the State of
Delaware, with its principal executive offices located in Weehawken, New Jersey. Hanover operates as a specialty direct marketer in the United States.
3. Chelsey Direct, LLC (“Chelsey”) is a private hedge fund which, with its affiliates,
beneficially owns approximately 69% of the issued and outstanding common stock and
approximately 75% of the common stock after giving effect to the exercise of all outstanding options and warrants to purchase common stock beneficially owned by Chelsey. In addition, Chelsey is holder of 100% of the Company’s Series C Participating Preferred Stock (“Series C Preferred”). Including the Series C Preferred and outstanding options and warrants beneficially owned by Chelsey, Chelsey controls approximately 91% of the voting rights of the Company. Chelsey is entitled to fill four seats on the Company’s board of directors. As the majority and controlling shareholder of Hanover, Chelsey owes fiduciary duties of good faith, fair dealing, loyalty, candor, and due care to plaintiffs and the other members of the Class.
4. Defendant Stuart Feldman (“Feldman”) is, and at all relevant times has been, a
director of Hanover. He also has been a principal of Chelsey Capital, LLC (“Chelsey Capital”), a private hedge fund and affiliate of Chelsey, for more than the past five years. Feldman is also the principal beneficiary of the Chelsey Capital Profit Sharing Plan, which is the sole member of Chelsey Capital. Feldman was elected a director of the Company by Chelsey effective November 18, 2003, the date of the Recapitalization (described below).
5. Defendant William B. Wachtel (“Wachtel”) is, and at all relevant times has been,
Chairman of the Board of Directors of Hanover. He also serves as the Manager of Chelsey and has been a managing partner of Wachtel & Masyr, LLP, or its predecessor law firm (Gold & Wachtel, LLP), since its founding in August 1984.
