A recent Law 360 story by Matt Chiappardi, “C&J Energy Blasts $5M Legal Fee Bid in Merger Suit,” reports that C&J Energy Services Inc. blasted a $5 million fee request from a shareholder who unsuccessfully challenged a $2.9 billion merger with Nabors Industries Ltd. in Delaware Chancery Court, arguing the suit did not result in any corporate benefit and the bid would be squelched anyway due to C&J’s prior bankruptcy.

The suing shareholder — The City of Miami General Employees’ and Sanitation Employees’ Retirement Trust, whose case was thrown out by the Chancery Court a year ago — pushed for the fee award in July, arguing its lawsuit spurred a $250 million reduction in the cash price C&J paid Nabors as part of the deal, a “massive cash reduction” that benefited C&J stockholders.

But C&J counters that the lawsuit had no effect, arguing the action was essentially dormant when the price reduction took place and was eventually tossed by the Chancery Court in a decision upheld by the Delaware Supreme Court in March.

“There is absolutely no support for plaintiff’s theory that its lawsuit spooked C&J’s directors into asking for the price reduction to whitewash their alleged breaches of fiduciary duties,” C&J said in its objection to the proposed fee award.  “During the entire time that the C&J board was pursuing the price reduction, plaintiff’s lawsuit was on life support.”  C&J also argues that the Chancery Court need not even consider the merits of the fee bid, contending that it is essentially a prepetition claim in its bankruptcy case initiated in 2016 in the Southern District of Texas.

The fee request is a claim from 2015, and the suing shareholder never filed a proof of claim in the Chapter 11 case, only a statement and reservation of rights that it was not objecting to the company’s plan because the exit strategy wouldn’t affect the action against nondebtor directors in Delaware, C&J said in its objection.

But the party from whom the suing shareholder is seeking the fee award in the Chancery Court is the debtor, which has since emerged from Chapter 11 in January, C&J argues.  C&J completed its $2.9 billion merger with Nabors in 2015, with Nabors receiving about $688 million in cash and retaining 55 percent of the equity in the newly formed company.  The overall cost of the deal to C&J was scaled back by $250 million at one point for reasons that were said to reflect energy market weakening and a need to shore up stockholder support, according to court records.

The case is City of Miami General Employees' and Sanitation Employees' Retirement Trust v. C&J Energy Services Inc. et al., case number 9980, in the Delaware Court of Chancery.