Today, February 1, 2019 the Honorable Victor Marrero, United States District Judge for the U.S. District Court Southern District of New York, granted both our preliminary injunction and request for the appointment of a temporary receiver. Robert W. Seiden is now the temporary receiver for LKM during the pendency of our action. This is a significant legal step forward in our quest to recover assets and restore some semblance of shareholder value equivalent to the assets of LKM.
We attach the order for your review, but we take this opportunity to point out significant provisions of the order:
- The Receiver shall safeguard all assets. As readers are aware, we have questioned several dubious transactions and transfers directly to the Company’s Board. To date, we have received little response. The receiver is empowered to safeguard assets and seek the return of assets that were subject to illegal transfer.
- The Receiver can remove employees and directors. When we started LKMforward, we attempted to work with the Company to remove various directors and employees that we believed were not working in the best interests of shareholders. These efforts were met with opposition by the Company, and requests for removals were ignored. The Receiver can move forward with these dismissals, and they are not subject to any vote of the Board or shareholder vote, both of which were previously stifled by the Company.
- The Receiver shall have full access to books and records. The Company did not complete audited financial statements for either 2017 or 2018. As such, there is a substantial information gap regarding current balances of assets, liability, shareholder equity, etc. The receiver is empowered to access books and records to get a much clearer picture of these balances and accounts.
- Access to bank accounts and bank records. The Company had a substantial cash balance when it last reported its financial statements. It is imperative that we review accounts and records to verify current cash and review accounts for any irregularities. Additionally, the receiver is granted signatory authorities on every account as well as a specifically funded account by the Company to pursue all of its efforts on behalf of the Company and its shareholders.
- Litigation on Behalf of the Company. The Receiver can bring litigation to return Company assets to the Company. The Receiver can also commence litigation against third-parties who aided and abetted any conduct detrimental to the Company’s shareholders.
These are some of the more significant Receiver powers that the Court has granted in this matter. We encourage you to read the complete court order that provides the comprehensive judgement and powers granted in this order. While we would hope the Company would fully recognize the Receiver’s powers and fully cooperate with the Receiver, from past experience, we realize the Company may continue to resist our efforts to fully restore shareholder value. We are prepared for either scenario. We will continue to update shareholders as warranted by new information. While we still have much work to do to achieve our goals, today is an important day in our quest to achieve justice for shareholders of LKM.