Compucredit Holdings Corp. v. Akanthos Capital Management, LLC
661 F.3d 1312
11th Cir.2011Background
- CompuCredit alleged that hedge fund holders of its 2005 convertible notes conspired to force an above-market redemption price by boycotting a tender offer.
- Two series of notes: 2025 and 2035, privately placed but now traded on the secondary market; as of Dec 2009 funds owned about 70% of the 2005 notes.
- In Dec 2009 CompuCredit announced a $25 million dividend and potential spin-off of its microloan business; creditors sued under UFTA claiming insolvency and sought injunctions to stop distributions.
- District court found no insolvency and denied injunctions; CompuCredit then offered to repurchase up to $160 million of notes at market value.
- Defendants did not participate in the tender; CompuCredit repurchased roughly 11% of 2025 notes at about 50% and 10% of 2035 notes at about 35% of par.
- In early 2010 Defendants pressed further actions including letters to CompuCredit’s auditor and SEC, and a collective demand to repurchase notes at par; CompuCredit refused and sued for Sherman Act violations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did defendants’ collective rejection of the tender violate the Sherman Act? | CompuCredit argues defendants conspired to inflate redemption price through boycott. | Defendants contend actions were mere pre-existing debt collection and not an antitrust conspiracy. | No Sherman Act violation; not an illegal boycott under the facts. |
| Are creditors’ actions to collect pre-existing debts subject to antitrust liability? | CompuCredit emphasizes coordinated behavior to alter debt repayment terms. | Defendants rely on creditor-collaboration cases permitting collective debt collection. | Not a violation; pre-existing debt collection activities not anticompetitive here. |
| Is the case controlled by whether the relationship is debt-based (pre-existing) rather than future-price fixing? | Argues analogous to price-fixing schemes in antitrust law. | Predicts creditor-debt context distinguished from future-market price fixing. | Distinguished; not an antitrust conspiracy given debt repayment context. |
| Did the district court properly grant judgment on the pleadings? | Claims should survive based on alleged coordination among creditors. | Arguments fail to show a Sherman Act violation on the pleadings. | Affirmed; no antitrust violation on the pleadings. |
Key Cases Cited
- FTC v. Superior Court Trial Lawyers Ass'n, 493 U.S. 411 (1990) (court-appointed counsel boycott not analogous to debt repayment context)
- Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980) (price fixing related to future transactions; distinguishable from pre-existing debt)
- United Airlines v. U.S. Bank, N.A., 406 F.3d 918 (7th Cir. 2005) (collective action by creditors to recover debts not antitrust violation)
- Sharon Steel Corp. v. Chase Manhattan Bank, N.A., 691 F.2d 1039 (2d Cir. 1982) (coordinated creditor actions to collect debts not violative of antitrust laws)