While there are certain provisions of the BK law that allow for removal of state court actions to federal courts they do not hold out any possibility of "re-litigating" the Delaware Judgment against SIGA. Texaco tried this in their 'defensive' Ch. 11 against Pennzoil and --while they made some progress-- were ultimately rejected in the Supreme Court. See: Texaco v Pennzoil 481 US 1 (1987). No hope of a "different judgment" according to that case so I think this will be a genuine reorg plan if the Ch. 11 is allowed to go forward ... with, of course, the possibility of a negotiated settlement between SIGA & PIP.
Anyone looking for more detail on the grim complications of a 'defensive' Ch. 11 should Google "Texaco v. Pennzoil" & "Texaco bankruptcy".
You ask a simple (and important) question to which there is no easy & complete answer. Generally, a Ch. 11 reorganization plan must deal with all groups of similar creditors 'fairly' which means that even unsecured, non-priority claims -- like the PIP judgment-- will receive something, although often only a small fraction of the original obligation. In all probability, SIGA will propose just such a plan of reorganization and PIP will raise typical BK objections -- perhaps with the goal of forcing conversion to a Ch. 7 and getting more $$ through a liquidation of SIGA assets. Long story short: A COMPLICATED AND MESSY LEGAL PROCESS WITH NO CERTAIN OUTCOME.
I agree that Ch.11 was always a possible end game, but your more strident POV ignores the practical alternative of SIGA offering a settlement along the lines of Parson's original formula. In other words, cut a deal with PIP. I don't see Ch. 11 giving SIGA management a clear advantage ,in that, their bankruptcy defense against PIP wipes out current SIGA equity. That is a high price to pay in order to pursue a doubtful appeal and possibly loose control of SIGA in a bankruptcy.
SIGA's Ch. 11 is an effective defense against any damage award of the DCC, in that, it reduces the damages --no matter the $$ amount-- to an unsecured, non-priority claim in the bankruptcy. Therefore, I consider your simple math calculation resulting in a $4+ share price highly unlikely. The purpose of Ch. 11 is to allow a debtor to retain control of assets so the process will not "give PIP 100% of ST246". SIGA's management has gained time (to appeal) and leverage (to negotiate) and --in all probability-- the right to retain control of its assets but it will remain a controversial legal move because it throws SIGA equity 'under the bus'.
While BK was always a possibility, I can't agree that it was a forgone conclusion: This Chapter 11 seems to put SIGA management in the position of acting contrary to the interest of SIGA equity. In fact, the only parties to gain a benefit from this likely 'train wreck' of legal fees are SIGA managers (and even that benefit seems trivial ... in that, some SIGA execs may keep their jobs under the BK reorganization).
Good info on the cash, Thanks. But even @ $99 Million it would come up short in the face of the final damage award. I would like to understand more about about the 'deferred revenue' line on the balance sheet. What form does this take and how do you reconcile it with the SIGA market cap? Are you looking at the 'deferred revenue' item as a litigation reserve or is it simply a representation of the potential amount in dispute with PIP for ST -46? IMO, you are reading far too much "manipulation" into the price action of these stocks ....
SIGA's current cash position is actually difficult to estimate but they are certainly not able to pay a judgment of hundreds of millions of $. As I recall, SIGA's best 'cash & equivalents' position was about $50 Million at the start of 2013; Motley Fool Guru reports that the no 'cash & equivalents' position is currently available for SIGA. What "cash rich" information do you have --or think you have-- and how would you reconcile that 'information' (misinformation might be a better term) with the current $70 Million market cap of SIGA? PIP & SIGA combined have a current market cap of less than $200 Million so your statements about SIGA are detached from accounting reality.
Zacks seems to be looking at the potential for a final damage award in the $300 - $500 Million range with their $6/12M price target but does not address the issue of SIGA's ability to pay. Nevertheless, IMO PIP can be bought --with some degree of confidence-- up to the 52W high of $2.42 with the hope for more gains later ... but beyond the 12M period covered by Zacks' call. The 'end game' here is probably a bankruptcy reorg by SIGA....
If SIGA can't meet a bonding requirement, they would probably still need to seek bankruptcy protection in order to gain relief from the state statutes and some negotiating leverage with PIP ,,, otherwise, PIP would simply seek to enforce the judgment ... SIGA is running out of State court options and would need to seek Federal protection if it hopes to 'negotiate' as you suggest ... SEE: TEXACO v. PENZOIL.
IMO, PIP is likely to trade up to resistance at the 52 W high of $2.42 on Parsons' decision on the theory that most of the legal uncertainty of the dispute has been resolved and that any appeal will result in the DSC quickly affirming the DDC's decision. Who knows, we might even see a share price of $2.75 - $3 in the short term if fund buyers express more interest in this 'special situation' .... However, the problem that will continue to dog this dispute is the fact that SIGA does not have the cash to pay the hundreds of millions in damages that are the likely final award to PIP. That is the reason PIP shares do not reflect the value of the likely final damage award. Perhaps the ultimate compensation to PIP will come in the form of a distribution of SIGA's assets from a bankruptcy reorg. of SIGA triggered by the judgment but it could certainly take time to see the full value of this damage award in PIP's shares.
While I agree that PIP will get a final damage award that would justify a share price north of $4, SIGA does not have the cash to pay those damages. The market is discounting the likely payout to account for that fact. IMO, PIP will ultimately trade much higher but the end game of this DDC decision is just too uncertain --and complex-- to expect that PIP will jump much higher based on the $ figure approved in the final damage award. However, IMO all legal uncertainty has been resolved: If Parson's decision is appealed, the DSC will quickly affirm; the only remaining question will be SIGA's ability to pay the damages and that question may ultimately be resolved in a bankruptcy reorganization of SIGA.
IMO, HLF will be forced to restate before next Q earnings. How will the equity trade after a $100 Million hit to the bottom line...? The FX 'shell game' has been exposed and the financial statements must be corrected.
BFD. HLF execs have been massive net sellers of the stock. CEO's last transaction was a sale nearly 40X the amount of the purchase you reference. Moreover, the stock repurchase was a gift to big inside sellers: they used HLF $ to buy back their shares at prices much higher than today's $49 range.
I agree. You might be interested to know that law enforcement & fraud investigators even have a name for this type of behavior: it is often referred to as the"Robin Hood" ploy and is considered an indication of fraud.
Institutional investors are exiting HLF because of: (1) Slowing growth, (2) poor 'quality of earnings' and (3) the possibility of adverse regulatory --or legal-- action. The decline has been abrupt but orderly with some counter trend buying around common inflection points (like the 52W low @ $49.35) by 'algos' and other short term traders. Baring adverse legal or regulatory action, HLF will probably find some stronger support when the stock reaches a single/D PE @ about $44 ... a price at which certain buyers may be willing to own shares notwithstanding the risks.