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News 22/Novembro/2019

Petrobras investors face new difficulties in receiving indemnity payment stipulated by settlement agreement signed in the United States to conclude class action

On November 1st of this year a number of Petrobras investors covered under the settlement agreement of its class action lawsuit in the United States were surprised to learn from the settlement`s claim administrator Epiq Class Action & Claims Solutions Inc. (“Epiq”) of delay to their receiving full settlement award due to apparent incorrect Proof of Claim document submission.

Strategically conceived in 2014 by Almeida Advogados’ CEO and Founding Partner, André de Almeida, and undertaken in conjunction with American law firm Wolf Popper LLP, the Petrobras class action (In re Petrobras Securities Litigation 14-cv-9662) sought compensation for Petrobras investors whose securities on the New York Stock Exchange suffered considerable loss in investment value after the Operation Car Wash corruption scandal was revealed.[1]

On June 22, 2018, Judge Jed S. Rakoff of the United States District Court for the Southern District of New York approved the settlement agreement proposed by Petrobras, which allocated USD 2.95 billion in settlement to compensate Petrobras investors for their Operation Car Wash-related securities losses.

Following the settlement`s approval, to recover from the settlement eligible investors must have submitted a Proof of Claim form by a certain date to the claims administrator Garden City Group (now Epiq) for processing.

The first challenge that arose for eligible investors attempting to recover from the settlement is that large numbers of them had not been notified of the settlement and never received a Proof of Claim form to complete. Almeida Advogados vigorously represented eligible investor clients in successfully petitioning to Epiq for filing extension on their behalf. As a result of such petitioning, an extension of filing was granted to all such investors through January 31, 2019. Pursuant to the court’s September 24, 2019 “Order Granting Authorization to Distribute the Net Settlement Fund,”[2] Petrobras investor clients of ALMEIDA ADVOGADOS were approved for First Distribution payment.

The second challenge that arose for eligible investors attempting to recover from the settlement, as Almeida Advogados subsequently discovered from brokerage firm, investment fund and individual investors that had approached it, was that First Distribution payment was not paid out to many of them on the November 1, 2019 First Distribution payment date because of apparent Proof of Claim defects that Epiq noted were not corrected in a timely manner. In some cases, it was confirmed that Epiq only pointed out defective Proof of Claim submission after the established January 31, 2019 proof of claim date.

In continuing protection of the interests of its eligible Petrobras investor clients, Almeida Advogados is now petitioning the claims administrator for extension of time for Proof of Claim deficiency cure towards their second distribution (Second Distribution) settlement award payment, based on the following conditions:

 

I – Investors Entitled to Receive Settlement Award:

  • Holders of Petrobras American Depositary Shares – ADSs and bonds traded on the New York Stock Exchange (NYSE), or as part of any other “covered transaction,” as defined in the class action settlement agreement;
  • In which the investors had ownership interest between January 22, 2010 and July 28, 2015 (the “Class Period”), as defined in the class action settlement agreement;

 

  • That submitted a Proof of Claim by January 31, 2019.

II – Almeida Advogados’ Taking Action:

As stipulated in the class action settlement agreement, payment of settlement award will initially be made to eligible investors on two occasions, the First Distribution, which occurred on November 1, 2019, and the Second Distribution, which will occur up to 120 (one hundred twenty) days following the First Distribution, with payment from a 15% of the Net Settlement Fund contingency reserve, on a pro-rata basis.[3]

Almeida Advogados is presently petitioning the claims administrator Epiq for extended time to cure the deficient claims of its eligible Petrobras investor clients for Second Distribution payment, implementing the following measures: (i) advising eligible investors as the necessary steps to be taken towards petitioning for an extended period for cure of the deficiencies noted by Epiq; (ii) calculating the monetary amount of the claim of said eligible investors, in accordance with the class action settlement agreement`s September 24, 2019-approved Plan of Allocation; and (iii) coordinating directly with the claims administrator Epiq to receive such settlement award amounts as are owing its eligible investor clients on the Second Distribution payment due date.

We shall be glad to provide you with more detailed information on the above upon request or via in-person meeting.

[1] Together with Wolf Popper LLP, Almeida Advogados filed the first putative securities class action against Petrobras – Kaltman v. Petroleo Brasileiro S.A. – Petrobras – in the United States District Court Southern District Court of New York.

[2] http://www.petrobrassecuritieslitigation.com/docs/2019-09-24%20Order%20on%20Motion%20for%20Distribution%200975(00343754xC40C2).pdf

[3] The claims administrator Epiq will continue to re-distribute funds following the Second Distribution until it is no longer economically feasible to do so. Any residue amount of funds left over will be assigned a cy pres recipient approved by the Court.

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