Charge Enterprises ($CRGE) $4M Investor Settlement

Charge Enterprises agreed to a $4 million settlement to resolve claims that investors were misled about the company’s liquidity, KORR-related investments, financial condition, and internal controls.

Outline:

Charge Enterprises faced a severe liquidity crisis as disputes with Arena Investors escalated. Investors allege that the company and certain former officers and directors misrepresented Charge’s liquidity, KORR-related investments, business prospects, and internal controls. Charge later entered a restructuring with Arena and filed for Chapter 11 bankruptcy, leaving common shareholders with no recovery through the bankruptcy.

Timeline:

• November 21, 2023: Charge disclosed that Arena had sent a default notice demanding additional interest of approximately $3.35 million, along with at least $692,216 in legal fees, expenses, and other costs.

• December 6, 2023: Charge disclosed additional Arena default notices involving alleged breaches related to the company’s agreement with KORR Acquisitions and investments managed by KORR, as well as a separate exchange agreement.

• January 25, 2024: Charge disclosed that it had received a foreclosure notice from an Arena affiliate on January 19, escalating the company’s debt and liquidity problems.

• February 28, 2024: Charge announced a restructuring agreement with Arena that contemplated a Chapter 11 bankruptcy, cancellation of existing common and preferred stock, and conversion of Arena-related debt into new Charge common stock.

• February 29, 2024: Charge was delisted from the Nasdaq Capital Market and began trading over the counter under the ticker symbol CRGEQ.

• March 7, 2024: Charge filed for Chapter 11 bankruptcy, after which its remaining shareholders ultimately received nothing through the bankruptcy process.

• May 28, 2024: A securities class action was filed against former Charge executives.

Background:

Charge Enterprises operated infrastructure and telecommunications businesses, including electric-vehicle charging infrastructure, wireless network communications, and telecommunications services. The company also relied on financing from Arena-related entities as it pursued its business strategy.

Investors allege that Charge did not accurately disclose the true condition of its liquidity. Among other things, the lawsuit claims that cash presented as unrestricted was actually invested in a private equity fund that required advance notice before withdrawals could be made, and that Charge’s cash balances, marketable investments, overall liquidity, business prospects, and going-concern risks were misstated.

The lawsuit also challenges Charge’s relationship with Kenneth Orr and KORR-related entities. Investors allege that important information concerning KORR-managed investments and financing arrangements involving Arena was not fully disclosed, while the adequacy of Charge’s internal controls was also allegedly overstated.

Charge’s financial problems became increasingly visible in late 2023. In November, the company disclosed an Arena default notice seeking millions of dollars in additional interest and costs, and in December it disclosed further defaults connected to KORR-related arrangements. By January 2024, an Arena affiliate had issued a foreclosure notice.

In February 2024, Charge entered into a restructuring agreement with Arena that contemplated cancelling existing common and preferred stock and converting Arena-related debt into ownership of the reorganized company. Charge filed for Chapter 11 bankruptcy on March 7, 2024, and Arena ultimately obtained control while Charge’s remaining shareholders received nothing.

What Can Investors Expect Now?

Charge Enterprises agreed to a $4 million settlement to resolve claims that investors were misled about the company’s liquidity, KORR-related investments, financial condition, and internal controls.

If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section.