Bank of New York Co., Inc. v. Northeast Bancorp, Inc., 1841
| Decision Date | 22 November 1993 |
| Docket Number | D,No. 1841,1841 |
| Citation | 9 F.3d 1065 |
| Parties | The BANK of NEW YORK COMPANY, INC., Plaintiff-Appellant, v. NORTHEAST BANCORP, INC.; First Fidelity Bancorporation; Frank J. Kugler, Jr.; George R. Kabureck and Peter V. Young, Defendants-Appellees. ocket 93-7411. |
| Court | U.S. Court of Appeals — Second Circuit |
Philip K. Howard, New York City (Linda C. Goldstein, Howard, Darby & Levin, of counsel), for plaintiff-appellant.
William H. Narwold, Hartford, CT (Laura W. Ray, Cummings & Lockwood, of counsel), for defendants-appellees Northeast Bancorp, Inc., Frank J. Kugler, Jr., George R. Kabureck and Peter V. Young.
Jonathan I. Blackman, New York City (Mitchell A. Lowenthal, Jonathan A. Willens, Martin Marvet, Chaya F. Weinberg-Brodt, Cleary, Gottlieb, Steen & Hamilton, Harold B. Finn, III, Donna Nelson Heller, Jennifer B. Rubin, Finn Dixon & Herling, of counsel), for defendant-appellee First Fidelity Bancorporation.
Before: OAKES, WINTER and McLAUGHLIN, Circuit Judges.
The Bank of New York Co. ("BNY") appeals from the denial by Judge Covello of its motion for a preliminary injunction. BNY, which, at the beginning of pertinent events, owned all the 1,000,000 issued shares of Northeast Bancorp's ("Northeast") non-voting common stock (Class B), sought to enjoin the merger of Northeast and First Fidelity Bancorporation ("First Fidelity"). Because the merger has already occurred and we cannot feasibly restore the status quo, we dismiss the appeal as moot.
In January 1992, Northeast, on the verge of bankruptcy and under pressure from federal and state regulators, entered into a Memorandum of Understanding with the FDIC and state banking regulators, whereby Northeast agreed to take affirmative actions to improve their operations. Then, in an effort to increase Northeast's financial stability, First Fidelity proposed to merge with Northeast and infuse it with cash. The terms of the proposed merger were disclosed in Northeast's March 1993 proxy statement. The proxy statement proposed both a primary and an alternative merger. Under either, Northeast would become a wholly-owned subsidiary of First Fidelity.
The primary merger contemplated the merger of a First Fidelity subsidiary into Northeast and the exchange of voting (Class A) and non-voting Northeast common stock for First Fidelity stock. It required two-thirds approval of both Class A shareholders and Class B shareholders. See Conn.Gen.Stat. Sec. 33-366(b) (1987). Because, however, Northeast anticipated opposition from BNY, the sole Class B shareholder, it also proposed a two-stage alternative merger, which was ultimately consummated. Under the first stage of the alternative plan, Northeast's voting common stock was exchanged for First Fidelity stock, giving First Fidelity control over Northeast. Because this first stage did not affect the terms, limitations, or rights of Class B shares, Class B approval was not required. See Conn.Gen.Stat. Secs. 33-361(a), 33-366(b)(3) (1987). This first-stage exchange was approved by 70% of the Class A shareholders at an April 22, 1993 shareholders' meeting.
On April 26, 1993, BNY sought a preliminary injunction to enjoin the consummation of the second stage. Judge Covello denied the motion on May 3. Completing the second stage, Northeast issued an additional 2,001,000 Class B shares, as authorized by a 1985 amendment to its Articles of Incorporation. First Fidelity then infused Northeast with $130 million in exchange for the newly-issued Class B shares. On May 17, 1993, First Fidelity, which now controlled the Class B vote, voted its new shares in favor of the merger of a newly-formed First Fidelity subsidiary into Northeast, in which the Class B shares held by BNY were exchanged for First Fidelity stock. This exchange completed the two-stage merger, and Northeast was thereafter run as a wholly-owned subsidiary of First Fidelity.
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