Item 1. Legal Proceedings
Item 1.
Legal Proceedings
As previously
disclosed, 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.