On November 11, 2001, BankAtlantic Bancorp, Inc. and BB&T agreed to a transaction wherein BB&T was to acquire 100% of the equity of BankAtlantic, a federal savings bank, from BankAtlantic Bancorp. The holders of several series of trust preferred securities (“TruPS”) issued by BankAtlantic Bancorp sued to enjoin the transaction and enforce covenants that generally prohibit BankAtlantic Bancorp from transferring or selling all or substantially all of its assets without the debt being assumed by the purchaser. Compass Lexecon was retained to analyze the relevant economic evidence on the percentage of assets transferred xand the effect of the proposed transaction on the TruPS holders.
After submitting a detailed expert report, Compass Lexecon’s President, Professor Daniel R. Fischel provided direct and rebuttal testimony at trial on the quantitative measures of the portion of assets that would be transferred in the transaction, and the market evidence as it related to the portion of assets transferred and to whether the amount of assets that would be left with BankAtlantic after the transaction would be enough to cover its obligations to the TruPS.
On February 27, 2012, Vice Chancellor J. Travis Laster of Delaware Chancery Court, permanently enjoined BankAtlantic Bancorp from consummating the sale to BB&T. Vice Chancellor Laster noted that even though the TruPS’ value almost doubled when the proposed transaction was announced, they still traded at under two-thirds of their par value, and found, consistent with Professor Fischel’s testimony and contrary to the testimony of Plaintiffs’ expert, that the transaction constituted a sale of all or substantially all of BankAtlantic Bancorp’s assets and therefore violated the applicable covenants. Compass Lexecon was retained by Jonathan Pickhardt and Richard Werder, Jr. at Quinn Emanuel Urquhart & Sullivan, LLP, who successfully represented the preferred security holders. Professor Fischel was supported by Rajiv Gokhale, Cliff Ang, and Paul Eastwood in our Chicago office.