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CLARKSON CO. v. SHAHEEN

July 27, 1982

THE CLARKSON COMPANY LIMITED, et al., Plaintiff,
v.
JOHN M. SHAHEEN, et al., Defendants; THE CLARKSON COMPANY LIMITED, etc., Petitioner, v. SHAHEEN NATURAL RESOURCES CO., etc., Respondents, SPENGLER, CARLSON, GUBAR, BRODSKY & ROSENTHAL, COWAN, LIEBOWITZ & LATMAN, P.C., etc., Additional Respondents



The opinion of the court was delivered by: OWEN

OPINION AND ORDER

 OWEN, District Judge

 Petitioner, The Clarkson Company Limited ("Clarkson"), seeks a preliminary injunction voiding a purchase agreement dated December 3, 1981, between Imafina S.A. ("Imafina") and Macmillan Ring-Free Oil Company, Inc. ("Macmillan"), a public company engaged in the refining of petroleum products. Under the agreement in question, Macmillan agreed to transfer a quantity of its shares to Imafina in exchange for $1.8 million dollars (the "Imafina transaction"). Based upon the evidence adduced at a hearing held on January 14 and 18, 1982, I hereby grant the injunctive relief sought by petitioner and declare the Imafina transaction void.

 In July, 1980, following a jury verdict, judgments were entered in favor of Clarkson against John M. Shaheen for approximately $46 million, against Shaheen Natural Resources ("SNR") for approximately $46 million, and against Founders Corporation ("Founders") for approximately $550,000. Since that time, Clarkson has diligently endeavored to enforce those judgments.

 The principal asset of all three judgment debtors is Shaheen's controlling stock interest in Macmillan via his 100% ownership of SNR and his 55% ownership interest in Founders, see The Clarkson Company Ltd. v. Shaheen, 533 F. Supp. 905 (S.D.N.Y. 1982). In order to recover on this combined asset, Clarkson commenced special proceedings.

 In substance, the Court has already ordered that "substantial blocks totalling forty-two percent of the outstanding Macmillan common stock owned by the three judgment debtors -- control shares -- be turned over to or for the benefit of Clarkson." But for the Imafina transaction, these shares, which total 728,458 shares of Macmillan common stock, would constitute the control shares of the company. The Imafina transaction, had it gone as planned, would have reduced Clarkson's holdings from 42% to 30%, destroyed its control status, and placed 26% of Macmillan's stock in Imafina's hands.

 On March 12 and 31, 1981, I issued orders protecting Clarkson's holdings in Macmillan which in pertinent part prohibited Macmillan from transferring "any property . . . to . . . Shaheen, SNR, or Founders, except pursuant to an order of the court."

 Against this background, Macmillan entered into a transaction in December, 1981 whereby 627,178 shares of authorized but unissued shares of Macmillan common stock were sold to Imafina, a Swiss corporation wholly owned by one Hubert Hendrickx ("Hendrickx").

 On December 14, 1981, I issued a further order prohibiting Macmillan from taking any action which would devalue Clarkson's holdings in it. Although I recount the specifics of this transaction in greater detail below, I note at this time that Macmillan and Imafina have agreed to "rollback" the portion of the purchase agreement pertaining to 227,178 shares of Macmillan which were transferred to Imafina, as the proof showed, in surreptitious, brazen and knowing violation of this Court's order of December 14, 1981. Today, therefore I need only consider whether the Imafina transaction violated the earlier March 12 and 31 court orders. Because I find that the transaction did in fact violate those orders as well, Clarkson's motion is granted.

 I decline to recount again here the long contentious history of this action. Familiarity with that history is presumed. See Clarkson Co. Ltd. v. Shaheen, 660 F.2d 506, 508 (2d Cir. 1981); Clarkson Co. Ltd. v. Shaheen, 533 F. Supp. 905, 917, 931 (S.D.N.Y. 1982); Clarkson Co. Ltd. v. Shaheen, 525 F. Supp. 625, 630 (S.D.N.Y. 1981).

 I turn first to certain preliminary legal questions raised by respondent's papers.

 I.

 The Court's Jurisdiction

 Macmillan, in the first instance, contends that this court lacks jurisdiction either to enjoin it from transferring its securities to a third party or to undo such a transfer once it has been consummated. In these terms, Macmillan's argument today repeats a legal theory which it first proffered before the Court of Appeals in its petition for a writ of mandamus dated December 24, 1981. Macmillan urges that this court lacks jurisdiction to enter such an injunction (1) because Hubert Hendrickx ("Hendrickx"), the sole owner of Imafina, and Imafina are not parties to this action, and (2) because Clarkson has failed to commence an ...


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