FOLLOW US

In a session on Wednesday, the Michigan Supreme Court appeared doubtful regarding Kathryn Kircher's claim that Boyne USA Inc. breached an agreement related to her share redemption. The case centers on whether Boyne’s decision to take on debt altered the formula for her share redemption price, which she argues was a breach of a 2014 settlement agreement.

Multiple justices probed Kircher’s attorney, Joseph Ahern, asking for specific language in the agreement that would have prevented the company from taking on debt or that directly tied the debt to her redemption price. Ahern struggled to provide the necessary wording from the contract, which led to skepticism from the justices.

The dispute began after Kircher, who reached a settlement with Boyne in 2014, claimed that her right to redeem shares was compromised when Boyne made significant purchases, including $300 million in real estate, which altered the company’s business model. Kircher’s redemption price formula, which was based on the company’s financial performance, went from $773 per share to a negative value of $2,164.94 by 2019.

While the Michigan Court of Appeals ruled in November 2023 that the breach of contract claim could proceed, Boyne’s legal team, led by Kenneth Brooks, countered that the contract didn’t impose any obligation on the company to avoid debt or renegotiate the redemption formula.

The justices also raised concerns about whether Kircher was aware of the company’s debt or if she had agreed to the redemption price formula despite its reliance on debt. Justice Megan Cavanagh emphasized that Kircher had known the formula involved debt, and questioned whether a company could simply be prohibited from taking on debt, potentially reducing the value of the shares.

The case highlights a complex balance between shareholder rights and corporate operations, with both sides asserting differing interpretations of the settlement agreement. The justices have not yet issued a ruling on whether the case can proceed.

The case is titled Kathryn L. Kircher v. Boyne USA Inc., case number 166459, in the Michigan Supreme Court.