Robbins Arroyo LLP: Horsehead Holding Corp. (ZINCQ) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed in the U.S. District Court for the District of Delaware. The plaintiff brings the complaint on behalf of all purchasers of Horsehead Holding Corp. (Other OTC: ZINCQ or “Horsehead”) securities between May 21, 2014 and February 2, 2016, for alleged violations of the U.S. Securities Exchange Act of 1934 by Horsehead’s officers and directors. Horsehead, together with its subsidiaries, produces and sells zinc and nickel-based products primarily in the United States and Canada.
Horsehead Accused of Lying About its Zinc Production Facility
According to the complaint, in September 2011, Horsehead built a new zinc production facility in Mooresboro, North Carolina to replace its old Monaca, Pennsylvania facility. Horsehead claimed the new facility would enable it to produce 30,000 more tons of zinc metal per year, reduce manufacturing costs, and increase labor productivity. However, the Mooresboro facility was purportedly plagued with severe construction, engineering and operational defects, including: clogged filter presses, electrolyte contamination, and unplanned overflow into containment areas resulting in environmental and safety hazards. The complaint alleges that Horsehead officials misstated the extent and seriousness of these problems and failed to disclose cash and revenue shortfalls that threatened the company’s ability to pay its creditors. The complaint further states that the Mooresboro facility relied on new and unproven technologies, and these catastrophic setbacks would require a substantial investment of time and money and would threaten the company’s ability to operate.
On January 22, 2016, Horsehead announced it was idling the Mooresboro facility and laying off most employees at the site. Then, on February 2, 2016, Horsehead announced it had initiated bankruptcy proceedings under Chapter 11 of the U.S. Bankruptcy Code. The same day, Horsehead filed a plan for restructuring revealing that it would take approximately $81.9 million and over two years to get the facility back on track. Then, on February 11, 2016, trading in Horsehead stock was suspended, and on February 23, 2016, it filed a notice that its common stock had been removed from listing on the NASDAQ exchange. After these revelations seeped into the market, Horsehead stock declined by 99% from the class period high, and is now essentially worthless at $0.08 per share.
Horsehead Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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