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Kohlberg Capital Corp. Hit By Shareholder Lawsuit

 

If you purchased Kohlberg Capital Corporation (NASDAQ: KCAP) securities between March 16, 2009 and December 24, 2009, you have certain options and there are strict and short deadlines running. Deadline: February 26, 2010. Those KCAP investors and current long term KCAP shareholders should contact the Shareholders Foundation, Inc.

You may contact us by using this form, or by sending an email to mail@shareholdersfoundation.com, or calling us at (858) 779-1554.

Company Name(s): 
Kohlberg Capital
Case Name: 
Kohlberg Capital 12/31/2009 Shareholder Class Action
Case Status: 
Lawsuit Filed
Affected Securities
NASDAQ: KCAP
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
12/31/2009
Class Period Begin: 
03/16/2009
Class Period End: 
12/24/2009
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
02/26/2010
Summary: 

An investor in Kohlberg Capital Corp. (Public, NASDAQ:KCAP) filed a lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of Kohlberg Capital Corporation (NASDAQ: KCAP) securities between March 16, 2009 and December 24, 2009, over alleged violations of Federal Securities Laws by Kohlberg Capital Corp. and others.

According to the complaint the plaintiff alleges that Kohlberg and its two top executive officers violated of Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder by issuing false and misleading financial statements between March 16, 2009 and December 24, 2009. The complaint alleges that defendants violated Generally Accepted Accounting Principles by failing to properly account for the fair value of its investment portfolio. The complaint further alleges that the Company misrepresented its efforts with its auditor, Deloitte and Touche LLP ("Deloitte"), to resolve issues regarding the Company's fair value accounting.

On November 9, 2009, Kohlberg announced its auditor, Deloitte & Touche LLP ("Deloitte"), raised questions concerning the Company's methodology and process in valuing its loan portfolio under GAAP. As a result of these questions, the Company stated it would not be able to timely file with the SEC its third quarter results for the period ended September 30, 2009. As a result, the Company's stock price fell $0.56 per share, or more than 10%, to close at $4.96.

On December 15, 2009 Kohlberg announced that its financial statements for the fiscal year ended December 31, 2008 and the first two quarters of 2009 should no longer be relied upon, due to issues regarding valuation of the Company's loan portfolio.

On December 24, 2009, Kohlberg filed with the SEC a letter it received from Deloitte, in which Deloitte disagreed with many of Kohlberg's contentions in its recent disclosures and on this news, the next two trading days, shares of Kohlberg declined $0.44 per share or 8.5% per share, to close at $4.72 on December 29, 2009, so the lawsuit.

Kohlberg Capital Corporation, located in New York, is an internally managed, non-diversified, closed-end investment company. The Company originates, structures and invests in senior secured term loans, mezzanine debt and selected equity securities primarily in privately held middle market companies. In addition to the Company’s middle market investment business, its wholly owned portfolio company, Katonah Debt Advisors and its affiliates manage collateralized loan obligation funds (CLO Funds) that invest in syndicated loans, bonds and other corporate credit instruments. Kohlberg Capital Corp. reported in 2007 Total Revenue of $38.48million and in 2008 Total Revenue of $49.21million with a Net Income of $26.14million. Shares of Kohlberg Capital (KCAP) traded recently at $3.89 per share, down from its 52weekHigh of $6.90 per share, $10.99 per share in August ’08, $13.35 per share in May 08, and over $19 per share in 2007.

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