Cobalt Securities Litigation

Update: Per the Distribution Order, payments went out to Authorized Claimants for this matter in April 2021.

The information contained on this web page is only a summary of information presented in more detail in the Notice of (I) Pendency of Class Action and Proposed Settlements; (II) Settlement Fairness Hearing; (III) Motion for an Award of Attorneys’ Fees and Reimbursement of Litigation Expenses (the “Notice”). Because this website is just a summary, you should review the Notice for additional details.

Plaintiffs have reached three Settlements that resolve all claims in the Action.

The Court-appointed lead plaintiffs GAMCO Global Gold, Natural Resources & Income Trust and GAMCO Natural Resources, Gold & Income Trust (together, the “GAMCO Funds” or “Lead Plaintiffs”), and additional named plaintiffs St. Lucie County Fire District Firefighters’ Pension Trust Fund, Fire and Police Retiree Health Care Fund, San Antonio, Sjunde AP-Fonden, and Universal Investment Gesellschaft m.b.H. (collectively, with Lead Plaintiffs, “Plaintiffs”), on behalf of themselves and the Settlement Class (as defined in the Notice), have reached three separate settlements (the “Settlements”) with the different defendant groups (collectively, the “Settling Defendants”) which, collectively, resolve all claims asserted by Plaintiffs in the Action on behalf of the Settlement Class against the Settling Defendants.

On February 13, 2019, following a hearing, the Court entered Judgments approving all three of the Settlements and orders approving the proposed Plan of Allocation for the proceeds of the Settlement and approving Lead Counsel’s motion for attorneys’ fees and expenses.

The Settlement Class consists of:

All persons and entities who purchased or otherwise acquired Cobalt common stock, Cobalt 2.625% Convertible Senior Notes due 2019, and/or Cobalt 3.125% Convertible Senior Notes due 2024 (collectively, “Cobalt Securities”) between March 1, 2011 and November 3, 2014, inclusive, and were damaged thereby. Included within the Settlement Class are all persons and entities who purchased or otherwise acquired shares of Cobalt common stock on the open market and/or pursuant or traceable to the registered public offerings on or about (i) February 23, 2012; (ii) January 16, 2013; and (iii) May 8, 2013. Also included within the Settlement Class are all persons and entities who purchased or otherwise acquired Cobalt convertible senior notes on the open market and/or pursuant or traceable to registered public offerings on or about (i) December 12, 2012; and (ii) May 8, 2014.

Certain persons and entities are excluded from the Settlement Class by definition as set out in ¶ 28 of the Notice.

The three Settlements, approved by the Court are:

1. A settlement for $146,850,000 in cash (the “Sponsor/GS&Co. Settlement”) with the private equity sponsors who invested in Cobalt prior to its initial public offering and sold certain Cobalt Securities during the Class Period (the “Sponsor Defendants”), certain individuals designated to the Cobalt board of directors by the Sponsor Defendants (the “Sponsor Designee Defendants”), and Goldman Sachs & Co. LLC (f/k/a Goldman, Sachs & Co.) (“GS&Co.”), which underwrote certain Cobalt Securities offerings during the Class Period;
2. A settlement for $22,750,000 in cash (the “Underwriter Settlement”) with the underwriters (other than GS&Co.) that underwrote certain Cobalt Securities offerings during the Class Period (the “Underwriter Settling Defendants”); and
3. A settlement for $220,000,000 (the “Cobalt Settlement”) with Cobalt and certain of its former officers and directors (the “Cobalt Individual Defendants”) (together, the “Cobalt Settling Defendants”), that is payable exclusively from the proceeds of Directors & Officers liability insurance (the “D&O Policies”) preserved through the Cobalt Bankruptcy Plan. The projected proceeds of insurance available to fund this settlement include (a) at least $4,200,000 existing from settlements with carriers ("Cobalt Settlement Existing Proceeds") and (b) future recoveries of up to $161,500,000 (or more if a court should find the carriers acted in a manner giving rise to a finding of insurance bad faith) from ongoing litigation by the Cobalt Settling Defendants against insurance carriers that issued the D&O Policies on their behalf (together with the Cobalt Settlement Existing Proceeds, the “Cobalt Settlement Fund”). The Cobalt Settlement Fund will be between $4,200,000 and $165,700,000. This is because the Cobalt Settling Defendants’ insurance carriers are disputing coverage under the D&O Policies. Litigation of the coverage disputes may reduce available insurance proceeds to fund the Cobalt Settlement Fund. Available insurance proceeds are also reduced by: (i) prior settlements with certain insurance carriers that funded the Cobalt Settlement Existing Proceeds, and (ii) claims settled in connection with the creditors in the Debtors’ Chapter 11 cases which will further reduce insurance proceeds available to fund the Cobalt Settlement Fund to approximately $161,500,000. Those amounts may be increased by claims of bad faith against the carriers. While Lead Counsel believe strongly in the Cobalt Settling Defendants’ position in the insurance coverage dispute, the outcome of the coverage dispute is uncertain and it could materially impact the amount of insurance proceeds available to fund the Cobalt Settlement Fund.

Please read the Notice to fully understand your rights and options.

The claims administration was completed in November 2020. On November 16, 2020, the Motion for Approval of Distribution Plan was filed. On November 17, 2020, the Court entered the Order Approving the Distribution Plan. The first distribution of the net settlement fund occurred in April 2021. Subsequent distributions will occur on a rolling basis, provided that net settlement funds are available.