Stanley Furniture, Board of Directors Facing Securities Complaint Over Transaction with Churchill Downs

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Stanley Furniture Company, Inc. and its board of directors are the defendants in a proposed class action filed in connection with a proposed asset sale between Stanley and Churchill Downs LLC. The 17-page complaint says Stanley, a company that specializes in wood furnishings, and its board of directors entered into an asset purchase agreement with Churchill on November 20, 2017, through which Stanley would sell Churchill nearly all of its assets for $11.5 million in cash, a $4.6 million promissory note, and other holdings. The plaintiff claims the defendants, while touting the fairness of the proposed deal, have failed to disclose material information necessary for stockholders to properly assess the fairness of the deal. The complaint specifically mentions the defendants’ alleged omissions in the statement of Stanley’s financial projections; the multiples used by financial advisor Stephens Inc. in its analysis of the company’s sale; the restrictions of the confidentiality agreements among parties involved in the sales process; and additional valuation information concerning the promissory note.