Basically, Trados got sold, preferred got their liquidation preference and common stock got zero dollars. Common stockholder sued saying that they should have held out for a deal that gave Common some $$ and that the board (which was controlled by preferred) violated their duty to common, but DE court said that the board + preferred were OK to do the deal.
Usually this is happening mid or later stage, where a once hot company is flat or declining, and the preferred holders control the majority of the board and the company (and sometimes the founder is already gone), in which case the preferred holders effectively control the decision entirely.
> The remaining $52.2 million was distributed to holders of the company's preferred stock—less than their total liquidation preference of $57.9 million
I'm not sure that's different than my point. $7.8M for the current employees/management, most of which should have gone to fill liq prefs. What am I missing?
Basically, Trados got sold, preferred got their liquidation preference and common stock got zero dollars. Common stockholder sued saying that they should have held out for a deal that gave Common some $$ and that the board (which was controlled by preferred) violated their duty to common, but DE court said that the board + preferred were OK to do the deal.
Usually this is happening mid or later stage, where a once hot company is flat or declining, and the preferred holders control the majority of the board and the company (and sometimes the founder is already gone), in which case the preferred holders effectively control the decision entirely.