On July 22, 2010, the BAT Masonry Company, Inc. ESOP (the “BAT ESOP”) purchased 100% (123,000) of the outstanding shares of BAT Masonry Company, Inc. (“BAT”), a Virginia corporation focused on masonry and construction work, for approximately $13.5 million.
The DOL filed a complaint on August 28, 2015, alleging that, among other things, James Joyner, the BAT ESOP’s special independent trustee, relied on a “flawed” valuation report previously prepared by Sheldrick, McGehee & Kohler LLC (“SMK”) in approving the transaction, thereby causing the BAT ESOP to pay “vastly more” than fair market value for BAT’s stock.
The DOL and Mr. Joyner settled all civil claims between them on September 29, 2017.1 Mr. Joyner agreed to pay $15,000 to the BAT ESOP, and he entered into a Process Agreement with the DOL whose terms largely tracked those of the Process Agreement in Perez v. GreatBanc Trust Company, but did include some new provisions (such as insurance coverage requirements). The case is closed.
Takeaways
- Joyner, the BAT ESOP’s special independent trustee, did not thoroughly read or question the valuation report.
- Joyner did not retain his own valuation advisor, but rather used SMK, which had been previously retained by BAT.
- Joyner was appointed as trustee, approved the transaction, and resigned as trustee in a period of less than 48 hours.
- Joyner agreed to pay $15,000 to the BAT ESOP.
1 Consent Order, Acosta v. BAT Masonry Co., No. 6:15-cv-00028-EKD-RSB (W.D. Va. Sept. 29, 2017), ECF No. 180-1.
