January 20, 2021, Northern District of Texas - Debtor American Achievement Corporation (AAC) is a leading publisher of yearbooks, manufacturer, and direct marketer of scholastic and graduation products and a provider of graduation commencement services. AAC operates its business through several direct and indirect subsidiaries.
The Plaintiffs are creditors and indirect shareholders of the Debtors. Defendants Bradley Dietz, Don MacKenzie, and Cerberus Business Finance, LLC are the Debtors' directors and a company controlled by the directors to act as Debtor's collateral agent.
On January 15, 2021, the Plaintiffs brought a lawsuit against the Defendants, alleging that the Defendants tried to seize the control of the Debtors' corporate structure during COVID – 19 to profit from their senior positions and forced AAC into a transaction effectuated through sale or foreclosure process premised on a depressed valuation. The Plaintiffs contended that this would lead the secured lenders to walk away with the entire AAC enterprise, and capture or sell off 100% of its considerably greater forecasted equity value. As per the Plaintiff, while this plan may serve the Defendants’ interests, it threatened to wipe out or impair the junior debt and equity that the Plaintiffs own in the process.
The Plaintiffs including creditors and stakeholders of the Debtor alleged to have suffered an injury due to the actions of the Defendants, the directors of the Debtors and sought a declaratory judgment from the court declaring that a certain "board consent" executed by the Defendants was invalid, void and ineffective.
As per the complaint, if left unresolved, this dispute threatens to increase the delay and expense associated with the Debtors bankruptcy cases, will create substantial uncertainty as to the exercise of corporate powers by the involuntary debtors, and will produce inevitable litigation at a time when all interested parties should be focused on finding a solution to minimize disruption to Debtors business and maximize its value as a going concern.
The case is In re AAC Holding Corp., in the United States Bankruptcy Court for Northern District of Texas administered under Case No. 21-30057. Gray Reed & McGraw LLP is representing the plaintiffs in this case. Judge Harlin DeWayne Hale is presiding over the Debtors bankruptcy case.