Delaware Court Reduces Attorney Fees in Sculptor Capital Deal

WILMINGTON, Del. — Class attorneys who helped secure an $80.8 million increase in proceeds from Sculptor Capital Management’s sale to Rithm Capital Corp. saw their fee proposal slashed from $5.75 million to $3.6 million by Delaware’s Court of Chancery on Friday. Vice Chancellor Sam Glasscock III’s decision concludes a nearly year-long legal battle over the sale, which had been marred by allegations of disclosure failures and favoritism towards Rithm.

Background of the Case

The dispute arose from concerns that Sculptor’s board members had dismissed a higher bid from a consortium led by Saba Capital Management LP and its founder, Boaz Weinstein, in favor of a lower offer from Rithm. As the sale process unfolded, the final per-share value increased from $11.15 to $12.70, largely due to pressures from ongoing litigation. The class attorneys sought compensation for their role in securing this improvement.

Court’s Decision on Attorney Fees

Vice Chancellor Glasscock acknowledged the complexity of the case but determined that the class attorneys’ efforts contributed only 12% to the final transaction price increase. He awarded $1,939,200 for their work in securing an extra $1.55 per share, a significant reduction from the $4 million minimum they had requested. The court noted that most of the price increase occurred before the lawsuit was expedited or significant documents were disclosed.