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Grodko v. CEDC & Puerto Rico Teachers v. CEDC Consolidated Actions - Background and Settlement Information

The Class in this Action includes all Persons who purchased CEDC common stock between March 1, 2010 and November 13, 2012, inclusive, who were damaged thereby.

On June 8, 2012, Jeffrey Grodko filed a class action complaint against the Individual Defendants and Central European Distribution Corp. in the United States District Court for the Southern District of New York, alleging violations of the federal securities laws. On August 7, 2012, the Puerto Rico System of Annuities and Pensions for Teachers ("PR Teachers") filed a class action complaint in the same court asserting similar claims. On September 4, 2012, by agreement of the parties, both actions were transferred to the District of New Jersey where, on November 8, 2012, the Court consolidated the two cases. On December 17, 2012, the Court appointed PR Teachers as Lead Plaintiff and Robbins Geller Rudman & Dowd LLP as Lead Counsel. On February 15, 2013, Lead Plaintiff filed an amended complaint (the "Amended Complaint") against the Individual Defendants and the Company. On April 7, 2013, CEDC filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. As a result, the Action was stayed as to CEDC but continued against the Individual Defendants. The Amended Complaint asserts claims under §§10(b) and 20(a) of the Securities Exchange Act of 1934 (15 U.S.C. §§78j(b), 78t(a) and 78t(b)) and Rule 10b-5 promulgated thereunder (17 C.F.R. §240.10b-5).

On April 17, 2013, the Individual Defendants moved to dismiss the Amended Complaint. Lead Plaintiff opposed the motion.

On October 14, 2013, the Settling Parties attended a mediation session with the Honorable Daniel Weinstein (Ret.), and although no agreement was reached, the parties continued their negotiations with the assistance of the mediator. As a result of those further discussions led by the mediator, on November 18, 2013, the Settling Parties reached an agreement-in-principle to resolve the Action. The Court terminated the pending motion to dismiss pending execution of formal settlement papers and judicial approval of the Settlement.

The Individual Defendants have denied and continue to deny that they have violated the federal securities laws or any laws or have otherwise misled investors as alleged in the Action. The Individual Defendants have denied and continue to deny specifically each and all of the claims and contentions alleged in the Action, along with all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Action. The Individual Defendants also have denied and continue to deny, inter alia, the allegations that any of the Individual Defendants made any material misstatements or omissions; that any member of the Class has suffered damages; that the prices of CEDC common stock were artificially inflated by reason of the alleged misrepresentations, omissions, or otherwise; that the members of the Class were harmed by the conduct alleged in the Action; or that the Individual Defendants knew about or were reckless with respect to the alleged misconduct. In addition, the Individual Defendants maintain that they have meritorious defenses to all claims alleged in the Action.

Nonetheless, taking into account the uncertainty, risks, and costs inherent in any litigation, especially in complex cases such as this Action, the Individual Defendants have concluded that further conduct of the Action could be protracted, burdensome, expensive, and distracting. The Individual Defendants have, therefore, determined that it is desirable and beneficial to them that the Action be settled in the manner and upon the terms and conditions set forth in the Settlement Agreement. The Settlement Agreement shall in no event be construed as or deemed to be evidence of an admission or concession by the Individual Defendants or the Released Persons with respect to any claim of any fault or liability or wrongdoing or damage whatsoever.

 The proposed Settlement in this Action creates a fund in the amount of Ten Million Dollars ($10,000,000.00) in cash and will include all interest and income that accrues on the fund prior to distribution (the "Settlement Fund"). The Settlement Fund, less costs, fees, and expenses (the "Net Settlement Fund"), will be divided among all eligible Class Members who submit timely and valid Proof of Claim forms to the Claims Administrator ("Authorized Claimants").

The Court appointed the law firm of Robbins Geller Rudman & Dowd LLP to represent you and other Class Members. These lawyers are called Lead Counsel. These lawyers will apply to the Court for payment from the Settlement Fund; you will not otherwise be charged for their work.  If you want to be represented by your own lawyer, you may hire one at your own expense.

Although the information in this website is intended to assist you, it does not replace the information contained in the Court approved Notice of Pendency and Proposed Settlement of Class Action and Settlement Agreement for this Action, both of which can be found and downloaded by clicking on the "Proof of Claim & Other Documents" tab above. We recommend that you read the Notices for each Action and other relevant case documents carefully.