New York investment firm Tweedy Browne, Nemesis-in-waiting to Lord Conrad Black's beleaguered empire, may be joined by fellow shareholders in legal action against Hollinger International. It is reportedly "next to certain" others will take up the judicial shillelaghs.
Tweedy, which hold some thirteen million Hollinger shares -- currently valued at around $141 million (€117.54m; £81.91m) -- has filed a lawsuit in Delaware, the state in which Hollinger is incorporated.
The suit seeks to recover legal costs incurred by Tweedy in the battle to retrieve payments personally received by Black and other Hollinger executives that are claimed to be the property of the company and, by extension, its shareholders.
Other investors too are in litigation mode. "At least one" institutional stockholder will launch an additional action, says Herbert Denton, president of New York investment fund Providence Capital and an adviser to shareholders.
"I think the lawsuit is likely to say that [there is] a cognizable claim that the board of directors failed in their duty of care -- that they did not pay enough attention to what was going on -- and second, that they failed in their duty of loyalty," Denton opined.
Although unwilling to say which directors might be named in the expected action, Denton noted the precedent of a judgment made in Delaware's chancery court earlier this year, when a judge ruled that the board of Disney had failed in its duty of care by allowing an £80m payoff to its former president, Michael Ovitz.
Denton believes this could equally apply to the expected case against Hollinger which, he believes, has the potential to transcend the Disney judgment to become the "granddaddy" of duty of care cases.
In mid-November the special committee appointed by Hollinger -- after much arm-twisting by Tweedy of the company's independent directors (among them Henry Kissinger and former presidential advisor Richard Perle) -- revealed it had disinterred $32.5 million in special payments unapproved by the board.
The following Monday, Black, who had benefited by $7.2 million of this sum, announced his resignation as chief executive -- albeit remaining as chairman of the company.
Data sourced from: MediaGuardian.co.uk and Times Online (UK); additional content by WARC staff