Sellas Prevails Against Investor’s Securities and Contract Claims

Skadden represented Sellas Life Sciences Group, Inc. in obtaining dismissal of a purported securities fraud claim and winning judgment on the pleadings dismissing contract claims. The dispute centered on whether, under a convertible debenture agreement between the plaintiff and Sellas, the stock price floor used in the formula for calculating the number of shares issued upon conversion adjusts for a previous reverse stock split. The plaintiff also filed federal securities and common law fraud claims. Judge Denise Cote of the U.S. District Court for the Southern District of New York rejected the plaintiff’s interpretation of the contract and held that the contract was unambiguous on its face and required that all references to share price in the debenture must adjust when the company has a change in capital structure.