Item 1. Legal Proceedings
Item 1.
Legal Proceedings
On
July
13,
2023,
three
individuals
who
were
shareholders
of
the
Bank
prior
to
its
reorganization
into
the
holding
company form of organization (the “Plaintiffs”)
filed a lawsuit against six persons, all of whom
were directors of the Bank at
the
relevant
time
(the
“Defendants”),
in
the
Circuit
Court,
Eleventh
Judicial
Circuit
for
Miami-Dade
County
(the
“Court”)
(Benes et
al. v.
de la
Aguilera et
al.) alleging
the Defendants
(i) caused
the Bank,
as directors
thereof, to
engage in
ultra
vires conduct by devising and approving the exchange
transaction effected in July 2021 pursuant to
which the Bank’s then
outstanding Class C and Class
D preferred stock was exchanged (the
“Exchange Transaction”),
which action the Plaintiffs
allege was
not permitted
by the
Bank’s
Articles of
Incorporation, and
(ii) breached
their fiduciary
duty as
directors of
the
Bank by approving and engaging in the Exchange Transaction.
The Plaintiffs seek the Court to certify the action as a class
action
and
to
award
damages
in
an
amount
to
be
proven
at
trial.
Plaintiffs
seek
damages
exceeding
$750,000
plus
attorney’s fees and
costs as well
as such other
relief as
the Court
may determine. The
Company believes that
the allegations
in the lawsuit are
legally and factually without
merit, and it intends
to vigorously defend against
the allegations in the
lawsuit,
pursue any
potential
counterclaims
against the
plaintiffs
as it
deems
appropriate,
and seek
coverage
from
its insurance
carriers. However,
there can
be no
assurance that
this litigation
will be
resolved favorably.
Furthermore,
there is
also no
assurance that we
will be able
to secure coverage
from our insurance
carriers for any
expenses incurred by us
in connection
with this litigation. If the plaintiff shareholders are successful,
the Court could
award substantial compensatory damages.
In addition
to the
foregoing, we
are from
time to
time subject
to claims
and litigation
arising in
the ordinary
course of
business.
These
claims
and
litigation
may
include,
among
other
things,
allegations
of
violation
of
banking
and
other
applicable regulations, competition
law, labor
laws and consumer
protection laws, as
well as claims
or litigation relating to
intellectual property,
securities, breach of contract
and tort. We
intend to defend ourselves vigorously
against any pending
or future claims and litigation.
At
this
time,
in
the
opinion
of
management,
the
likelihood
is
remote
that
the
impact
of
such
proceedings,
either
individually or
in the
aggregate, would
have a
material adverse
effect
on our
consolidated results
of operations,
financial
condition
or cash
flows. However,
one
or more
unfavorable outcomes
in any
claim
or litigation
against
us, including
the
aforementioned litigation regarding the Exchange
Transaction, could have
a material adverse effect
on the period in which
such claims
or litigation
are resolved.
In addition,
regardless of
their merits
or their
ultimate outcomes,
such matters
are
costly, divert management’s
attention and may materially adversely affect
our reputation, even if resolved in our favor.
Item 1A. Risk Factors
For detailed information about certain risk factors that could materially affect our business, financial
condition, or future
results, see “Part I, Item 1A – Risk Factors” of the 2022 Form 10-K/A and see “Part II, Item 1A – Risk Factors” of the March
31, 2023 Form 10-Q.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.