Sculptor Capital Management, Inc.

Case Details

Date Filed: September 11, 2023
Case Number: C.A. No. 2023-0921-SG
Jurisdiction: Delaware Court of Chancery
icon-casetype Case Type: Shareholder Class Action

Case Summary

Saxena White and its co-counsel filed a class action complaint (the “Complaint”) challenging publicly-traded hedge fund Sculptor Capital Management, Inc.’s (“Sculptor”) sale to Rithm Capital Corp (“Rithm”) for $11.15 per share. Specifically, the Complaint alleged that Sculptor’s board of directors breached their fiduciary duties by agreeing to sell to management’s preferred buyer, Rithm, even though it was not for the highest price available for the company.

The Complaint details that another buyer, a group led by Saba Capital Management (“Saba”), made higher bids that were not conditioned on retaining the CEO of Sculptor. When Sculptor did not accept the higher bids, Plaintiff moved for and was granted expedited proceedings. Over the next month, Saxena White and its co-counsel engaged in intense litigation, reviewing 500,000 pages of discovery, conducting six depositions, filing amended complaints, and fully briefing a motion for a preliminary injunction. Plaintiff’s second amended complaint named as additional defendants a group of founding shareholders of Sculptor, who had sued Sculptor’s board based on similar theories as Plaintiff, and initially coordinated their action with Plaintiff. The founders then abruptly “settled” and abandoned the class for private benefits at a critical inflection point in the litigation, compounding the burden on Plaintiff and opening a new front in the action.

In response to the intense litigation and the offers from Saba, Rithm twice raised their bid, first to $12 per share and then to $12.70. In addition, Sculptor made substantial additional disclosures in supplemental proxy filings, disclosing material information uncovered by Plaintiff during discovery. On the morning of the scheduled preliminary injunction hearing, defendants agreed to a settlement which included the payment of an additional $6.5 million to Sculptor’s shareholders, bringing the deal price to approximately $13 per share.

On April 19, 2024, Plaintiff filed its motion for final approval of the proposed settlement, certification of a settlement class, and award of attorneys’ fees and expenses. The final settlement hearing was held on May 20, 2024 and the order from the Court is pending.

The Complaint and information about the proposed settlement, including the stipulation of settlement, the scheduling order, and the brief in support, are posted here.