What You Should Know:
– Shareholders of HealthTap, Inc., a once-promising telehealth company, have filed a lawsuit against Mohr Davidow Ventures (MDV) and its affiliates, alleging breaches of fiduciary duty and a scheme to dilute minority shareholders and take over the company at a significantly depressed valuation.
– The lawsuit claims that MDV, as the controlling shareholder of HealthTap, orchestrated a series of actions that intentionally drove down the company’s value, creating artificial liquidity crises to justify self-interested financing rounds that benefited MDV at the expense of other shareholders.
Allegations of Mismanagement and Self-Dealing
Key allegations include:
- Gutting the core business: MDV allegedly forced HealthTap to abandon its successful enterprise business model, focusing instead on a less profitable direct-to-consumer approach. This move, according to the lawsuit, intentionally drove down the company’s valuation.
- Manufacturing liquidity crises: The lawsuit claims that MDV wasted company funds and created artificial financial distress to justify the need for additional financing on terms favorable to MDV.
- Conflicted financing transactions: MDV allegedly used its control over the board to approve self-interested financing rounds that diluted minority shareholders and allowed MDV to acquire a majority stake in HealthTap at a significantly depressed valuation.
- Misleading disclosures: The lawsuit claims that MDV and the board misled shareholders about the company’s financial condition and the fairness of the financing transactions.
Impact on Minority Shareholders
As a result of these alleged actions, the plaintiffs, who are minority shareholders in HealthTap, claim their ownership has been significantly diluted. They allege that MDV now holds the vast majority of the company’s equity, while their own stake has been reduced to a small fraction of its original value.
Seeking Relief
The plaintiffs are seeking equitable relief and damages to remedy the alleged breaches of fiduciary duty. They are asking the court to:
- Declare the financing transactions invalid.
- Order MDV to disgorge any profits it made from the alleged misconduct.
- Award damages to the plaintiffs for their losses.
