AIMCO Partnerships Buyout Case — Consolidated Capital Institutional Properties, LP
The Proposed Settlement of the Action Has Been Preliminarily Approved:
A Settlement of the Action was reached in July 2011. At the February 10, 2012 Final Approval Hearing, the Arbitrator approved the Settlement. More information about the Settlement, including the Final Judgment, Notice, Plaintiffs’ Motion for Final Approval of the Settlement and Attorneys’ Fees and the Supporting Attorney Declaration, can be accessed below.
Chimicles Schwartz Kriner & Donaldson-Smith LLP (CSK&D) filed a class action arbitration with the American Arbitration Association on behalf of the unaffiliated limited partners of Consolidated Capital Institutional Properties, LP. (“CCIP”). The action arose from the buyout in early 2011 (“Merger”) of the unaffiliated limited partnership interests (“Unit(s)”) in CCIP by Apartment Investment and Management Company (“AIMCO”) and its affiliates (“Defendants”). In the Merger, Defendants paid the unaffiliated limited partners (“LPs”) approximately $4.31 per Unit.
Over time, Defendants had acquired a majority (approximately 75%) of the outstanding Units of CCIP and ownership of CCIP’s general partners. In September 2010, Defendants announced that they would cash out the Units held by the limited partners in CCIP, which would result in Defendants owning a 100% interest in CCIP. The Class consists of the minority, unaffiliated limited partners of CCIP who owned approximately 25% of CCIP’s Units. AIMCO and its affiliates were fiduciaries of CCIP and the Class.
Because Defendants owned a majority of the Units, the Merger was proposed and consummated without the approval or ratification by the LPs. On September 14 and October 12, 2010 Defendants filed papers with the SEC, including Form S-4s, which were thereafter amended and/or supplemented (“Prospectuses”) and disseminated them to the LPs, which announced the Merger and the calculation of the Merger consideration. The merger consideration to be paid to the LPs in the Merger was calculated primarily by taking Defendants’ appraised value of the Properties, adding additional assets, and then deducting mortgage balances, advances from Defendants, and other liabilities. The total Merger Consideration to the LPs for their interest in CCIP was $200,000 or $4.31 per Unit (or the equivalent value in Aimco OP Units).
In the Merger, Defendants offered the LPs the right to contractually seek appraisal rights (“Contractual Appraisal Right Option”). The Contractual Appraisal Right Option provided that the Defendants would unilaterally select three arbitrators to sit on a panel and would conduct the arbitration in Denver, Colorado and that the arbitration panel was permitted to charge the LPs with the costs of the appraisal proceeding.
Also as part of the Merger, Defendants offered to pay the LPs an additional cash payment, only if the LPs agreed to execute a waiver and release of Defendants from a broad array of potential claims not only related to the Merger but to “any other circumstance,” or any matter related to their ownership of Units, and for claims which the LPs might possess, but did not know or suspect to exist (“Waiver & Release”). If the LPs elected to execute the Waiver & Release, they would receive an additional $2.16 per Unit.
The Merger was consummated on February 11, 2011.
The Action contends that Defendants breached, or aided and abetted breaches of, fiduciary duties owed to the LPs, for proposing and implementing the Merger which was unfair to the LPs with respect to the price they were paid by Defendants for their CCIP Units, and with respect to the process employed in doing the Merger. In the Action, the Plaintiffs sought monetary damages and alleged that, among other things, Defendants misled the Class and gave them inadequate consideration for their Units in the buyout.
The Plaintiffs and Defendants entered into a Stipulation of Settlement in July 2011, which provides that the LPs will receive an additional payment of approximately $74 per Unit. The Arbitrator preliminarily approved the Settlement in November 2011 and on December 10, 2011, the Notice of Pendency of Class Action Settlement was sent to the LPs. The Notice is attached below.
If you have any questions about the Notice, your rights or the litigation, please contact us below.