On December 14, 2018, Honorable United States District Judge Victor Marrero granted our request for Temporary Restraining Order (attached) pursuant to our shareholder derivative litigation filed against LKM and certain Directors on 12/13/18 in the United States District Court, Southern District of New York (also attached).
Those of you who have followed LKMForward, from its inception, know we have made numerous efforts to get the Board to assume its fiduciary responsibility to all shareholders. These overtures have been continuously rebuffed and ignored by the Directors of LKM. Therefore, we were left with no choice but to file litigation against LKM and its Directors. We are pleased by the judge’s decision t grant this relief preventing any further asset transfers or other assignments to occur until the injunction hearing. Succinctly, a shareholder derivative suit is intended to allow shareholders to “step into the shoes” of the Board of Directors when the Board can’t or won’t take action to right wrongs at a company. If there was ever a candidate for this action, LKM’s Board is it.
Through months of alleged neglect and self-dealing, as stated in our complaint, we have reached a point in which we can no longer rely on the Board to do the right thing, or anything for that matter, to address LKM issues. Consequently, our action seeks a permanent injunction against LKM and the appointment of a temporary receiver to do what the Board should have done many months ago. A receiver is often associated with the liquidation of a company. However, that is not the purpose of the receiver we seek to appoint. We believe that are habilitative receiver can restore company assets, reform the Board of Directors and institute proper corporate governance to regain legal and NYSE compliance. We also believe the company’s assets, once restored; still form the basis of a profitable company in the future.
It is unfortunate that a small group of shareholders, supported by a much larger group of shareholders, must do what Directors and Officers of LKM are paid to do and legally required to do on behalf of shareholders. However, that is the reality of the current situation. While we still call upon Board members to immediately right the numerous wrongs documented in our complaint, it would be foolish to rely solely on the Board to take any constructive action. To that end, we have instituted this action solely for the benefit of shareholders. We are prepared to do what the Board, notwithstanding ample opportunity, has not been able to do despite our best efforts to create a path for resolution beneficial to all shareholders.
It is important to note that our complaint currently lists only three of the directors as defendants. However, make no mistake that each and every director of the board is responsible for their own actions (and more commonly in LKM’s case inactions). We reserve the right, and in fact state it directly, that each of the directors will certainly become a defendant in these matters if they choose not to take the necessary and prescribed steps to right these wrongs and put LKM in a position to recover. This is not just a corporate matter. Each defendant, if found liable, also has potential personal responsibility beyond insurance and available corporate assets. The “long arm of the law” can reach around the world to enforce judgements and recover assets wherever they may reside. Rest assured, LKMForward is going to do whatever is necessary and within our power to restore the company and hold accountable those responsible for its current state, including all remedies, restitution and recoveries that justice allows.
If we are successful in the appointment of a receiver, and we believe this case cries out for that remedy, we will ask the receiver to review the actions of all Board members and any third parties that aided or abetted defendants in this matter. This includes not only board members who directly participated in the actions alleged in our complaint, but also those who shirked their fiduciary duties to shareholders by doing nothing in the face of this onslaught against shareholder interests. This also includes directors and former directors who erroneously assumed that not attending shareholder meetings or resigning when confronted with wrong doing somehow absolved them of liability.
While we are currently not privy to all records and documents regarding recent dubious transactions, the receiver, if appointed, will be empowered to review all documents, actors and actions that may have contributed to the current state of the corporation and the immense damage to the Company and its shareholders. We will leave no stone unturned in this review, and let the proverbial chips fall where they may. This review will extend to all current board members, former board members and third parties involved in this matter including, but not limited to, creditors, debtors and professionals who aided and abetted LKM directors and management in this wanton destruction of shareholder value.
The choice is simple. Let members of the current Board and their allies walk off with all the companies assets, delist the company and take the company that is rightfully yours. Or fight these actions with everything we have available to prevent this outcome. We at LKMForward made this choice several months ago when we launched this movement. We have not wavered from our commitment to this movement. We ask you to join us in both spirit and action to score a victory for all. If you have not yet pledged your shares to the LKMforward cause and wish to join in this fight, please email firstname.lastname@example.org and we’ll be sure to add you to the team fighting for the Company’s future.