Bloomberg Law
Aug. 21, 2023, 3:46 PMUpdated: Aug. 21, 2023, 4:38 PM

AMC Stock Conversion Can Proceed, Delaware’s Top Court Says (1)

Jennifer Kay
Jennifer Kay
Staff Correspondent

An AMC Entertainment Holdings Inc. stock conversion may proceed this week after the Delaware Supreme Court rejected a request to halt the plan pending an appeal.

It’s “unclear how long impediments to AMC’s ability to raise capital would continue if the status quo were preserved pending appeal,” the court said Monday in an en banc order signed by Chief Justice Collins Seitz Jr.

Issues that an objecting investor identified for appeal “can be decided post-closing without risking the serious harm that AMC might suffer if settlement approval is delayed. Under these circumstances, a status quo order pending appeal is not warranted,” the order said.

AMC shares slid as much as 25% Monday after the court‘s order became public. The preferred APE units dropped as much as 6.6%.

A nine-figure settlement approved Aug. 11 by Delaware’s Court of Chancery cleared a path for AMC to convert its preferred equity units, known as APEs, into common shares. The company has said the APE units would cease trading on Aug. 25.

One of the thousands of retail investors who objected to AMC’s plan asked the Delaware Supreme Court last week to stop the conversion pending an appeal. The Chancery Court denied a motion to stay the conversion when it approved the settlement.

The dispute began in February when a pension fund sued AMC, claiming it was sidelining small investors by empowering APE holders who would support its share conversion plan to secure new financing.

The pension fund told the Supreme Court in a brief filed Friday that “the significant risk of bankruptcy or financial restructuring and the total loss of the investments of holders of both common stock and APEs weigh heavily against entry of a status quo order pending appeal.”

Separately, another AMC investor filed a lawsuit in Chancery Court last week alleging the settlement shortchanges APE holders.

The case is In re AMC Entertainment Holdings, Inc. Stockholder Litigation, Del., No. 290,2023, 8/21/23

—With assistance from Bloomberg News reporter Yiqin Shen in New York.

(Updates with details about AMC share prices in the fourth paragraph.)

To contact the reporter on this story: Jennifer Kay in Philadelphia at

To contact the editor responsible for this story: Andrew Childers at

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