A union pension fund is suing over Liberty Tax’s acquisition of Budd’s Buddy’s Home Furnishings business, for about $25 million. In August, the Asbestos Workers’ Philadelphia Pension Fund filed suit alleging Liberty shareholders and former shareholders unjustly enriched themselves through the Buddy’s deal.As disclosed in LIberty's Form 10-Q filing with the SEC this month, the plaintiff wants damages awarded to the company, based on the harm allegedly caused by the defendants. The suit seeks to have atender offer halted, unless better information is provided and to have the two major Liberty shareholders, Vintage Capital, and B. Riley Financial, declared liable for unjust enrichment.
Liberty is transforming its business by becoming a holding company for franchise operations, including its tax business. It has acquired Buddy’s and the Vitamin Shop and agreed to buy Sears Hometown Outlet.
The pension fund filed suit on behalf of the company against a number of Liberty’s shareholders, including Vintage, and B. Riley and individuals Matthew Avril, Patrick A. Cozza, Thomas Herskovits, Brian R. Kahn, Andrew M. Laurence, Lawrence Miller, G. William Minner Jr., Bryant R. Riley and Kenneth M. Young.
The suit alleges investors caused Liberty to acquire Buddy’s at an inflated price; transferred control of Liberty to Vintage, the largest Liberty investor, and B. Riley for no premium and without and a stockholder vote. The suit claims two organizations and other former stockholders “to unfairly extract additional value from the Company by virtue of a TRA” and offered other shareholders an inadequate price for their shares, $12 per share. The fund also claims the inside investors used misleading or omissive Tender Offer documents and issued shares to Vantage at less than fair value to fund the tender offer and the acquisition of Vitamin Shoppe.
