SLR Investment Corp. 10-Q

Item 1. Legal Proceedings Other than as described below, we, the Administrator and the Investment Adviser are not currently subject to any material pending legal proceedings threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition or results of operations beyond what has been disclosed within these financial statements. On January 17, 2022, a stockholder complaint was filed in the United States District Court for the Eastern District of New York, against the Company and the members of the Board, entitled Gates v. SLR Investment Corp., et al., No. 1:22-cv-00261 (the “Gates Complaint”). On January 21, 2022, a stockholder complaint was filed in the United States District Court for the Southern District of New York, against the Company and the members of the Board, entitled Shumacher v. SLR Investment Corp., et al., No. 1:22-cv-00576 (the “Shumacher Complaint”). On January 31, 2022, two putative class action stockholder complaints were filed in the Circuit Court for Baltimore City, Maryland against SUNS and the members of the Board of Directors of SUNS (the “SUNS Board”), captioned respectively Neal v. Gross, et al., No. 24-C-22-000557 (Md. Cir. Ct. Baltimore City) (the “Neal Complaint”), and Tobin v. Gross, et al., 24-C-22-000558 (Md. Cir. Ct. Baltimore City) (the “Tobin Complaint”). On February 8, 2022, a stockholder complaint was filed in the United States District Court for the Southern District of New York, against SUNS and the members of the SUNS Board, entitled Kershner v. SLR Senior Investment Corp., et al., No. 1:22-cv-01096 (the “Kershner Complaint”). On February 21, 2022, a stockholder complaint was filed in the United States District Court for the Southern District of New York, against SUNS and the members of the SUNS Board, entitled Sharp v. SLR Senior Investment Corp., et al., No. 1:22-cv-01418 (the “Sharp Complaint”). On February 22, 2022, a stockholder complaint was filed in the United States District Court for the Southern District of New York, against SUNS, the members of the SUNS Board, us, and the Investment Adviser, entitled Ciccotelli v. SLR Senior Investment Corp., et al., No. 1:22-cv-01454 (the “Ciccotelli Complaint”). On February 22, 2022, a stockholder complaint was filed in the United States District Court for the Eastern District of Pennsylvania, against SUNS and the members of the SUNS Board entitled Justice v. SLR Senior Investment Corp., et al., No. 2:22-cv-00673 (the “Justice Complaint,” and together with the Gates Complaint, the Schumacher Complaint, the Neal Complaint, the Tobin Complaint, the Kershner Complaint, the Sharp Complaint, the Ciccotelli Complaint and the Justice Complaint, the “Merger Complaints”). Each of the Gates and Schumacher Complaints alleged, among other things, that the joint proxy statement/prospectus initially filed with the SEC on December 16, 2021 contained materially misleading and incomplete disclosures. Each of the Gates and Schumacher Complaints sought, among other things, that supplemental disclosures be made to the joint proxy statement/ prospectus to address the alleged materially misleading and incomplete disclosures. As a result of the alleged omissions, each of the Gates and Schumacher Complaints sought to hold the Company and its directors liable for violating Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and additionally sought to hold the Company’s directors liable as control persons pursuant to Section 20(a) of the Exchange Act. 52 Table of Contents Each of the Neal and Tobin Complaints alleged, among other things, that the members of the SUNS Board breached their fiduciary duties when they approved the proposed merger between SUNS and the Company, and that the disclosures in the joint proxy statement/prospectus initially filed with the SEC on December 16, 2021 contained materially misleading and incomplete disclosures. Each of Neal and Tobin Complaints raised these claims under Maryland law, and sought: (i) certification that the case can be maintained as a class action, with the plaintiff named as a representative of the proposed class (consisting of the public shareholders of SUNS); (ii) an order enjoining the shareholder vote to approve the proposed merger between SUNS and the Company; and (iii) rescission of the proposed merger between SUNS and the Company. These cases were dismissed as to the named plaintiffs only on April 1, 2022 with the Court retaining jurisdiction in connection with a possible future fee and expense application by plaintiffs. The defendants believe that the Company made complete disclosure of all information required to be disclosed to ensure that the Company’s stockholders were able to make an informed vote at the Company’s Special Meeting of Stockholders held on March 22, 2022 and that the additional disclosures requested by the plaintiff were immaterial and/or were included in the preliminary joint proxy statement/prospectus filed as part of the Company’s Registration Statement on Form N-14 on December 16, 2021. Accordingly, the defendants believe these claims are without merit and intend to vigorously defend against them. However, in an attempt to reduce the costs, risks and uncertainties inherent in litigation and to maximize the Company’s net asset value at the time of the Mergers, the Company determined to voluntarily include certain supplemental disclosures in its Current Report on Form 8-K filed on March 14, 2022. The inclusion of such disclosures shall not be deemed an admission of the legal necessity or materiality of any of these disclosures under applicable law. Rather, the Company and the Board specifically denied all allegations in the Merger Complaints that any additional disclosure was or is required. On April 1, 2022, each of the Neal Complaint and the Tobin Complaint was dismissed as to the named plaintiffs only with the Court retaining jurisdiction in connection with a possible future fee and expense application by plaintiffs. On April 6, 2022, each of the Schumacher Complaint, the Kershner Complaint, the Sharp Complaint, the Ciccotelli Complaint and Justice Complaint was voluntarily dismissed. On April 14, 2022, the Gates Complaint was voluntarily dismissed.