Cases
Global Cord Blood Corporation
Securities Class Action
Overview
Overview
- Date:
- 6/21/2024
- Company Name:
- Global Cord Blood Corporation
- Stock Symbol:
- CORBF
- Class Period:
- FROM 6/4/2019 TO 5/3/2022
- Status:
- Filed
- Filing Date:
- 4/22/2024
- Court:
- U.S. District Court: Southern District of New York
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Global Cord Blood Corporation (“Global Cord” or the “Company”) (OTC: CORBF) in the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased or otherwise acquired Global Cord securities between June 4, 2019 and May 3, 2022, both dates inclusive (the “Class Period”). Investors have until June 21, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Global Cord, together with its subsidiaries, provides umbilical cord blood storage and ancillary services in the in the Beijing Municipality, Guangdong Province, and Zhejiang Province of the People's Republic of China ("PRC"). The Company has received but rejected multiple "going private" offers, or transactions in which a public company is converted into private ownership.
From the Company's inception until January 2018, Global Cord's largest shareholder was Golden Meditech Holdings Limited ("Golden Meditech" or "GMHL"), a medical device and hospital management company incorporated in the Cayman Islands and based in the PRC. Founded in 2001 by Defendant Yuen Kam ("Kam"), Golden Meditech was publicly listed on the Hong Kong Stock Exchange until October 2020, when it was taken private by Kam.
Golden Meditech's previous financial interest in Global Cord is just one of the significant connections that have existed between the two companies during the relevant time. Global Cord and Golden Meditech also maintained the same registered address in Hong Kong, even occupying the same building floor. Defendants Kam, Ting Zheng ("Zheng"), and Bing Chuen (Albert) Chen ("Chen") also have significant additional business and/or personal ties to each other and to Global Cord and Golden Meditech, as further alleged in the Complaint.
In September 2016, Golden Meditech, in combination with The University of Texas at MD Anderson Cancer Center, announced the founding of Cellenkos Inc. ("Cellenkos"), a biotechnology company based in Houston that focuses on umbilical cord blood-derived T-regulatory cellular therapies.
On April 29, 2022, after the market closed, in a Form 6-K filed with the SEC, Global Cord announced that it had entered into a Material Definitive Agreement to acquire Cellenkos for over $1 billion, including $664 million in cash and 114 million Global Cord shares-roughly the same number of the Company's shares that were already outstanding (the "Transaction"). The Transaction thus stood to dilute the Company's shareholders by half and deplete its sizable cash balance.
On this news, Global Cord's stock price fell $0.98 per share, or 28.57%, from $3.43 at the close of trading on April 29, 2022, to close at $2.45 per share on May 2, 2022.
According to the filed complaint, the Transaction was rushed to completion in under three days from when Global Cord's Board was first notified of it, without the shareholder approval that would be expected-and was required-for such a momentous transaction. Further, it grossly overvalued Cellenkos, such as by assuming that all of its treatments would receive regulatory approval.
Global Cord's Directors approved the Transaction to benefit themselves and other Company insiders and related parties. The court in the Cayman Islands has criticized the role of Global Cord's Directors and management in the Transaction, stating (among other observations) that "it is impossible at this stage to discern any easily comprehensible commercial rationale for the Company, especially being a listed company, consummating and implementing an arrangement which was so financially and strategically significant with such a breath-taking combination of speed and stealth, particularly in circumstances where the Company was (as at April 29, 2022) under 'minority' rather than majority shareholder control."
On May 3, 2022, Blue Ocean Structure Investment Company Limited, a wholly owned subsidiary of Nanjing Yingpeng, filed a Petition (the "Petition") in the Grand Court of the Cayman Islands, Financial Services Division, opposing the Transaction. Specifically, the Petition asserted that Cellenkos had no discernible long-term value, that the Transaction purchase price was unjustifiable, that the Transaction would result in a massive dilution of Global Cord shareholders, that the close relationship between Global Cord and Cellenkos constituted a conflict of interest, and that the Transaction was approved without sufficient shareholder knowledge.
On this news, Global Cord's stock price fell $0.22 per share, or 9.09%, to close at $2.20 per share on May 5, 2022.
On September 22, 2022, as a result of the actions described above and other misconduct by the Individual Defendants related to the Transaction, the Grand Court of the Cayman Islands suspended the powers of Global Cord's Directors and appointed Joint Provisional Liquidators over the Company.
Following the appointment of the Joint Provisional Liquidators, the NYSE halted trading in Global Cord's ordinary shares, effective September 23, 2022.
Evidence that was presented to the Cayman Islands court, and that was investigated further and corroborated by the Joint Provisional Liquidators appointed by the Cayman court, shows that the Cellenkos Transaction was actually part of a cover-up aimed at "filling a gap" in Global Cord's balance sheet. It turns out that from September 2015 to May 2022, Global Cord made secret, undisclosed payments of approximately $606 million to entities related to Golden Meditech and controlled by Defendant Kam.
Kam and the Golden Meditech Defendants misappropriated even more of Global Cord's funds. The Joint Provisional Liquidators have been able to identify only approximately US$427,000 and HK$135,000 in Global Cord's bank accounts, as compared to the over $1 billion in cash that the Company reported before the Transaction was announced.
On June 22, 2023, the Securities and Exchange Commission filed a Form 25 Notification of Removal from Listing and/or Registration Under Section 12(b) of the Securities Exchange Act of 1934, stating: "Pursuant to 17 CFR 240.12d2-2(b), the Exchange has complied with its rules to strike the class of securities from listing and/or withdraw registration on the Exchange." The Company's shares continue to trade in the United States on the over-the-counter market and, as of April 22, 2024, are trading at $1.35 per share.
The complaint further alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Global Cord employed a capital allocation strategy designed to reserve funds for Company insiders and related parties rather than for the benefit of Company shareholders; (ii) Global Cord's decisions to reject multiple going private offers and enter into the Transaction were nothing more than self-serving and conflicted attempts by Defendants to divert company funds to corporate insiders and related parties; (iii) Defendants had fundamentally misrepresented to investors Global Cord's approach to capital allocation, strategic investments, acquisitions, and related party transactions as a result of the misappropriation by Defendant Kam and his entities of hundreds of millions of dollars from the Company; and (iv) as a result, the Company's public statements were materially false and misleading at all relevant times.
If you purchased or otherwise acquired Global Cord shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
Global Cord, together with its subsidiaries, provides umbilical cord blood storage and ancillary services in the in the Beijing Municipality, Guangdong Province, and Zhejiang Province of the People's Republic of China ("PRC"). The Company has received but rejected multiple "going private" offers, or transactions in which a public company is converted into private ownership.
From the Company's inception until January 2018, Global Cord's largest shareholder was Golden Meditech Holdings Limited ("Golden Meditech" or "GMHL"), a medical device and hospital management company incorporated in the Cayman Islands and based in the PRC. Founded in 2001 by Defendant Yuen Kam ("Kam"), Golden Meditech was publicly listed on the Hong Kong Stock Exchange until October 2020, when it was taken private by Kam.
Golden Meditech's previous financial interest in Global Cord is just one of the significant connections that have existed between the two companies during the relevant time. Global Cord and Golden Meditech also maintained the same registered address in Hong Kong, even occupying the same building floor. Defendants Kam, Ting Zheng ("Zheng"), and Bing Chuen (Albert) Chen ("Chen") also have significant additional business and/or personal ties to each other and to Global Cord and Golden Meditech, as further alleged in the Complaint.
In September 2016, Golden Meditech, in combination with The University of Texas at MD Anderson Cancer Center, announced the founding of Cellenkos Inc. ("Cellenkos"), a biotechnology company based in Houston that focuses on umbilical cord blood-derived T-regulatory cellular therapies.
On April 29, 2022, after the market closed, in a Form 6-K filed with the SEC, Global Cord announced that it had entered into a Material Definitive Agreement to acquire Cellenkos for over $1 billion, including $664 million in cash and 114 million Global Cord shares-roughly the same number of the Company's shares that were already outstanding (the "Transaction"). The Transaction thus stood to dilute the Company's shareholders by half and deplete its sizable cash balance.
On this news, Global Cord's stock price fell $0.98 per share, or 28.57%, from $3.43 at the close of trading on April 29, 2022, to close at $2.45 per share on May 2, 2022.
According to the filed complaint, the Transaction was rushed to completion in under three days from when Global Cord's Board was first notified of it, without the shareholder approval that would be expected-and was required-for such a momentous transaction. Further, it grossly overvalued Cellenkos, such as by assuming that all of its treatments would receive regulatory approval.
Global Cord's Directors approved the Transaction to benefit themselves and other Company insiders and related parties. The court in the Cayman Islands has criticized the role of Global Cord's Directors and management in the Transaction, stating (among other observations) that "it is impossible at this stage to discern any easily comprehensible commercial rationale for the Company, especially being a listed company, consummating and implementing an arrangement which was so financially and strategically significant with such a breath-taking combination of speed and stealth, particularly in circumstances where the Company was (as at April 29, 2022) under 'minority' rather than majority shareholder control."
On May 3, 2022, Blue Ocean Structure Investment Company Limited, a wholly owned subsidiary of Nanjing Yingpeng, filed a Petition (the "Petition") in the Grand Court of the Cayman Islands, Financial Services Division, opposing the Transaction. Specifically, the Petition asserted that Cellenkos had no discernible long-term value, that the Transaction purchase price was unjustifiable, that the Transaction would result in a massive dilution of Global Cord shareholders, that the close relationship between Global Cord and Cellenkos constituted a conflict of interest, and that the Transaction was approved without sufficient shareholder knowledge.
On this news, Global Cord's stock price fell $0.22 per share, or 9.09%, to close at $2.20 per share on May 5, 2022.
On September 22, 2022, as a result of the actions described above and other misconduct by the Individual Defendants related to the Transaction, the Grand Court of the Cayman Islands suspended the powers of Global Cord's Directors and appointed Joint Provisional Liquidators over the Company.
Following the appointment of the Joint Provisional Liquidators, the NYSE halted trading in Global Cord's ordinary shares, effective September 23, 2022.
Evidence that was presented to the Cayman Islands court, and that was investigated further and corroborated by the Joint Provisional Liquidators appointed by the Cayman court, shows that the Cellenkos Transaction was actually part of a cover-up aimed at "filling a gap" in Global Cord's balance sheet. It turns out that from September 2015 to May 2022, Global Cord made secret, undisclosed payments of approximately $606 million to entities related to Golden Meditech and controlled by Defendant Kam.
Kam and the Golden Meditech Defendants misappropriated even more of Global Cord's funds. The Joint Provisional Liquidators have been able to identify only approximately US$427,000 and HK$135,000 in Global Cord's bank accounts, as compared to the over $1 billion in cash that the Company reported before the Transaction was announced.
On June 22, 2023, the Securities and Exchange Commission filed a Form 25 Notification of Removal from Listing and/or Registration Under Section 12(b) of the Securities Exchange Act of 1934, stating: "Pursuant to 17 CFR 240.12d2-2(b), the Exchange has complied with its rules to strike the class of securities from listing and/or withdraw registration on the Exchange." The Company's shares continue to trade in the United States on the over-the-counter market and, as of April 22, 2024, are trading at $1.35 per share.
The complaint further alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Global Cord employed a capital allocation strategy designed to reserve funds for Company insiders and related parties rather than for the benefit of Company shareholders; (ii) Global Cord's decisions to reject multiple going private offers and enter into the Transaction were nothing more than self-serving and conflicted attempts by Defendants to divert company funds to corporate insiders and related parties; (iii) Defendants had fundamentally misrepresented to investors Global Cord's approach to capital allocation, strategic investments, acquisitions, and related party transactions as a result of the misappropriation by Defendant Kam and his entities of hundreds of millions of dollars from the Company; and (iv) as a result, the Company's public statements were materially false and misleading at all relevant times.
If you purchased or otherwise acquired Global Cord shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
The individual or institution below (“Plaintiff”) has reviewed and agrees to the Bragar Eagel & Squire, P.C. (“BESPC”) retainer agreement and authorizes BESPC to prosecute an action on Plaintiff’s behalf under the federal securities laws or applicable state laws to recover damages on behalf of investors in Global Cord Blood Corporation. BESPC will prosecute the action on a full contingency basis and will forward all costs and expenses.
Case Updates
Retainer Agreement
This will confirm that you have retained Bragar Eagel & Squire, P.C. (“BESPC”) to represent you in connection with potential litigation against Global Cord Blood Corporation (the “Company”) and its directors and officers. BESPC has conducted an investigation and believes that there is a valid basis to assert claims against the Company and its directors and/or officers for violation of federal or state securities laws.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 6/4/2019 to 5/3/2022 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time.
Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 6/4/2019 to 5/3/2022 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders, i.e., the “Class,” and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
No Special Treatment
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.