J.Crew has been slapped with two lawsuits since announcing plans to go private, and at least seventeen law firms are known to be investigating the deal, according to WWD. Such investigations are to be expected when big companies make these kinds of deals and may not ultimately mean anything. But the chief complaints in the suits filed so far are that J.Crew and its board members helped each other breach fiduciary duty. The suits also cite conflicts with the deal since Goldman Sachs and Bank of America Merrill Lynch are already among J.Crews creditors but also provided financing to the firms in on the deal.
And then there’s rock-star CEO Mickey Drexler, who some suing shareholders think is shady. Under the terms of the proposed deal, Drexler will keep his 5.4 percent ownership stake, entitling him to “total benefits of $16,938,125,” according to one suit seeking class-action status.
However, one expert says that Drexler wants to take the company private so that he can “grow the company internationally under the radar,” and says that whoever owns J.Crew “would be most foolish not to make sure that Mickey Drexler continues in his role. He is one of the great merchant princes and his insight into J.Crew continues to remain critical for its success.”