Entwistle & Cappucci LLP Receives Preliminary Approval of $126.3 Million Mid-Trial Settlement of Alta Mesa Securities Class Action

January 27, 2025

Entwistle & Cappucci LLP recently entered into a $126.3 million cash settlement on behalf of a Class of investors led by its institutional and individual clients.  The settlement was achieved after three weeks of jury trial and nearly six years of litigation arising from the catastrophic collapse and multi-billion-dollar asset write down of Alta Mesa Resources, Inc. (“Alta Mesa”) in 2019, just one year after the company went public.

The Class includes individuals and entities that (1) were entitled to vote on the going-public transaction, which was accomplished by way of a “special purpose acquisition company” or “SPAC,” then known as Silver Run Acquisition Corporation II (“Silver Run II”); and/or (2) purchased securities of the SPAC or the post-de-SPAC company, Alta Mesa, during the period from August 16, 2017 through May 17, 2019, inclusive.  If approved by the Court, the proposed settlement will constitute the largest-ever securities class action recovery involving a SPAC.

Also referred to as a “blank check” company, a SPAC completes an initial public offering of shares to investors and then seeks to merge with a target business or assets.  Several high-profile SPAC offerings in the past decade resulted in serious allegations of fraud and misconduct, collectively costing investors billions of dollars in investment losses.

Silver Run II was sponsored by private equity firm Riverstone Holdings.  In August 2017, Silver Run II announced it had agreed to merge with two privately owned oil and gas companies, Alta Mesa Holdings (“AMH”) and Kingfisher Midstream (“Kingfisher”).  Between August 2017 and January 2018, Riverstone and the incumbent management of AMH and Kingfisher engaged in a proxy roadshow to solicit approval from the SPAC’s shareholders for the proposed merger.  Class Plaintiffs alleged that statements made by certain Defendants during the 2017 roadshow presentations and in the Definitive Proxy Statement issued in January 2018 in connection with the “de-SPAC” transaction misled SPAC investors about the business prospects of AMH and Kingfisher.  According to Class Plaintiffs, the misleading statements in those materials prevented public investors from making an informed vote on the de-SPAC, and Defendants were at least negligent in failing to provide accurate information.  Class Plaintiffs also alleged that, following the de-SPAC, Alta Mesa and certain individuals made misleading public statements about the operations and results of the merged public company, and were at least reckless in doing so.

Entwistle & Cappucci filed the original class action in the United States District Court for the Southern District of Texas on behalf of its clients and the Class in 2019.  Another class action was filed by in federal court in New York, but was subsequently transferred to the Southern District of Texas and consolidated with the Texas action.  Entwistle & Cappucci, together with its Co-Lead Counsel Robbins Geller Rudman & Dowd LLP, have since jointly prosecuted the consolidated class action before the Honorable George C. Hanks, Jr.

On August 12, 2024, Judge Hanks denied the primary Defendants’ summary judgment motions.  Trial on the core claims against Riverstone, Alta Mesa and several individuals commenced on November 6, 2024 in Houston, Texas.  Class Plaintiffs and the remaining Defendants ultimately agreed to settle the case, and the trial was stayed on December 10, 2024.  The Court preliminarily approved the settlement on January 17, 2025, and has set a final approval hearing for April 30, 2025 at 11:00 am.