Court Rules for Antioch Defendants in Long-Running ESOP Case

In Fish v. GreatBanc Trust Company, No. 09 C-1668 (D.C. N. Ill. Sept. 1, 2016), a district court ruled in favor of the defendants, who included GreatBanc and members of the Antioch Company board and family who previously owned stock outside of the ESOP. Antioch became 100% ESOP-owned in 2003, after being one of the first companies to set up an ESOP in the 1970s. It experienced spectacular growth after acquiring Creative Memories, a scrapbook company, but an equally spectacular decline as digital photo storage and the recession destroyed much of that business.

The plaintiffs argued that the ESOP paid too much for the stock and that the appraisal failed to account for a looming repurchase obligation. The 131-page ruling dismissed all claims, saying that the process the company used met fiduciary standards, that the valuation was reasonable, and the family owners and board were not fiduciaries because they handed over those duties to independent parties. The ESOP transaction involved multiple ESOP advisors and analyses, including both valuation and fairness opinions by separate parties. The long-running litigation has cost over $23 million.

While the decision breaks no new legal ground, and may be appealed, it is perhaps the most detailed analysis a court has ever performed and is worth reading for the depth of the analysis.