Ema Garp Fund v. Banro Corp.

OPINION AND ORDER The complaint in this case alleges false and misleading statements, as well as material omissions of fact, in communications from Banro Corporation, Inc. (“Banro,” or the “Company”), and its former CEO, John A. Clarke, to Banro’s shareholders. Plaintiffs, who are Banro shareholders, seek compensatory damages for violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§78j(b), 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. §240.10b-5. Banro has recently undergone a restructuring proceeding in the Canadian court system, and Defendants have moved to dismiss this action based on that proceeding. For the reasons set forth in the remainder of this Opinion, Defendants’ motion to dismiss Plaintiffs’ claims on the grounds of international comity is granted.BACKGROUND¹A. The Banro CCAA ProceedingBanro is a public corporation headquartered in Canada and incorporated under Canadian law. (FAC 7). On December 22, 2017, Banro commenced a reorganization proceeding (the “Banro CCAA Proceeding”) in the Ontario Superior Court of Justice pursuant to Canada’s Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the “CCAA”). (Dietrich Decl.

2, 44). The Court pauses to provide background information on CCAA proceedings generally, after which it will return to the details of the Banro CCAA Proceeding.During a CCAA proceeding, the CCAA court appoints a licensed insolvency trustee as a monitor (the “Monitor”), to act with fiduciary duties to all stakeholders. (Dietrich Decl. 15). The debtor company’s management team and board of directors generally remain in place, and the board retains power to approve the disposition of assets, or the restructuring of the company, subject to oversight by the Monitor. (Id. at 9). The CCAA court has the power to grant a stay of proceedings in favor of the debtor for an initial period of 30 days, and subsequently to extend the stay on a showing that the debtor has acted diligently and in good faith. (Id. at 12). The Monitor is required to publish notice of the proceedings in the Canadian newspapers, to send notice to every known creditor, and to make certain information about the proceeding publicly available on a website devoted to the case. (Id. at