Business Context and Reporting Period
This Form 8-K is filed by Exantas Capital Corp. (not ACRES Commercial Realty Corp.) on March 27, 2019. The report addresses the status of shareholder derivative litigation initiated in 2017 against current and former officers and directors.
Key Financial Metrics
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The only financial figure disclosed relates to litigation settlement costs:
- Settlement Cost: $550,000 in plaintiffs' attorneys' fees.
- Funding Source: To be funded by the Company's insurers.
Material Changes and Litigation Status
The filing details the resolution of consolidated shareholder derivative actions (Federal Actions) that were previously dismissed by the Court in 2018 but subsequently appealed by plaintiffs.
- Settlement Agreement: Executed on January 27, 2019, following court-ordered mediation.
- Terms: The Company will implement corporate governance changes and pay the $550,000 fee. Defendants receive releases from liability while denying all allegations of wrongdoing.
- Current Status: The Court granted preliminary approval on March 22, 2019.
- Next Steps: A hearing for final approval is scheduled for May 17, 2019.
Guidance, Outlook, and Risks
The filing contains no forward-looking financial guidance or management commentary regarding business operations. The primary risk disclosed is the contingent liability of the litigation settlement, which is subject to final Court approval. The filing notes that the judgments dismissing the actions remain valid unless reversed by the Second Circuit.
Investor Verification Checklist
- Verify the registrant name is Exantas Capital Corp., not ACRES Commercial Realty Corp.
- Confirm the final Court approval of the settlement at the hearing scheduled for May 17, 2019.
- Review the specific corporate governance changes outlined in the attached Settlement Agreement (Exhibit 99.2).
- Monitor for any shareholder objections filed prior to the final approval hearing.