In re: Arctic Glacier International, Inc.

Arctic, an income trust, filed for bankruptcy under Canada’s analog of Chapter 11 and received recognition under 11 U.S.C. 1521(a). Its bankruptcy Plan imposed few limits on the Monitor (trustee) and insulated Arctic and its officers from any claim related to the bankruptcy with limited exceptions. The Monitor sold Arctic’s assets and repaid creditors in full. On December 11, 2014, Arctic issued notices announcing that the shareholders as of December 18 would be entitled to the initial distribution without specifying how much Arctic would distribute or when. Arctic did not notify the Financial Industry Regulatory Authority (FINRA) of its plans. FINRA regulates distributions on the U.S. Over-the-Counter Market. Nor did the Plan refer to FINRA’s rules. Arctic’s share price held steady until January 22, 2015, although its shares no longer traded with the right to the dividend and should have lost value. Brodskis bought 12,600,000 Arctic shares on the Over-the-Counter Market. On January 21, the Monitor announced that the next day it would distribute a dividend of 15.5557 cents per share to shareholders as of December 18. Brodskis argue FINRA would have set a date of January 23, 2015, so their shares would have entitled them to the dividend. On January 23, Canadian and American regulators froze trading. When trading resumed, Arctic's share price plunged from 21 to 5 cents, reflecting the paid-out dividend. Brodskis sued Arctic. The Bankruptcy Court dismissed the complaint as barred by the releases and res judicata. The Third Circuit affirmed. Brodskis bought shares subject to the Plan’s terms, including terms that governed post-confirmation acts taken to carry out the Plan, and were on notice. View "In re: Arctic Glacier International, Inc." on Justia Law