#United States #Consolidated Communications #Longman v. CCI #Delaware Corporation #Mattoon

Consolidated Communications Holdings, Inc. Faces Legal Challenges

In a noteworthy legal development, Consolidated Communications Holdings, Inc. is currently embroiled in a class action lawsuit that raises serious questions regarding its merger agreement's compliance with Delaware corporate laws. The lawsuit, initiated by plaintiff Thomas C. Longman on July 31, 2024, aims to challenge the validity of the merger involving Condor Holdings LLC and Condor Merger Sub Inc.. The case is officially titled Longman v. Consolidated Communications Holdings, Inc., et al., filed in the Court of Chancery of the State of Delaware.

Longman’s complaint alleges that the Agreement and Plan of Merger dated October 15, 2023, was not properly approved in accordance with Delaware corporate statute 8 Del. C. § 251. This statute mandates specific procedures for mergers and acquisitions to ensure shareholder interests are protected. The plaintiff references a prior court decision, Sjunde AP-Fonden v. Activision Blizzard, Inc., suggesting that similar procedural errors may have occurred in this case.

The Company's Response

In their defense, both Consolidated Communications and its board of directors vehemently deny the allegations of misconduct. They assert that the adoption of the merger agreement strictly adhered to Delaware law. However, to address any uncertainties that arose from the complaint and the Activision ruling, the board executed ratifying resolutions on December 20, 2024. This action included approval under Delaware General Corporation Law sections 204 and 147, which allowed the company to rectify any potential compliance issues.

Subsequently, on December 27, 2024, Consolidated Communications filed a Form 8-K with the U.S. Securities and Exchange Commission—a formal disclosure indicating that the board had ratified the merger agreement according to the Delaware statutes. This Form 8-K, along with its accompanying notice, is accessible publicly and provides insight into the company's attempts to alleviate legal ambiguities.

In light of the board's actions, the plaintiff has acknowledged that the lawsuit's claims have become moot. A significant development occurred on February 3, 2025, when the court entered a stipulation to dismiss the action with prejudice concerning the plaintiff, marking a critical checkpoint in the legal proceedings.

Settlement and Legal Fees

In a unique turn, the company has agreed to compensate $160,000 in fees and expenses to the plaintiff's legal counsel as part of the resolution but clarified that the court has yet to rule on the actual amount of these fees. The involved legal teams include Lynda Grant from the Grant Law Firm PLLC and Howard Longman from Longman Law, P.C. representing the plaintiff, while Consolidated Communications is defended by Kristin Murphy from Latham & Watkins LLP and Ryan Stottmann from Morris, Nichols, Arsht, & Tunnell LLP.

Conclusion

The unfolding situation illustrates the complexities and criticalities surrounding corporate mergers, particularly concerning compliance with existing laws designed to protect shareholders' interests. While the immediate threat of litigation seems to have diminished with the court's dismissal, the implications of this case may influence how similar agreements are assessed and approved in the future. Stakeholders in the telecommunications sector and corporate governance circles will be closely monitoring how Consolidated Communications maneuvers through these turbulent waters and what this could mean longer term for stakeholder relations and legal precedent in mergers and acquisitions.