Benzinga | Dec 30, 2021 03:34PM EST

SCWorx Announces Settlements Of Securities Class Action And Derivative Action Lawsuits

SCWorx Corp. (NASDAQ:WORX) today announced that it has entered into binding agreements to settle both the securities class action and derivative action lawsuits which were commenced in 2020.

The class action was consolidated under the caption Yannes v. SCWorx Corp. (1:20-cv-03349). The proposed settlement resolves all claims asserted against SCWorx and the other named defendants without any admission of liability or wrongdoing by the Company or any defendant. Under the terms of the class action agreement, (i) the insurers for the Company and Marc Schessel (former CEO) will make a cash payment to the class plaintiffs and (ii) the Company will issue $600,000 worth of common stock to the class Plaintiffs, in exchange for which all parties will be released from all claims related to the securities class action litigation. The class action agreement provides that the parties will negotiate in good faith to enter into a definitive settlement agreement within thirty days. Once the Company issues the $600,000 worth of stock, the Company believes it will have satisfied its obligations with respect to the payment of the $750,000 accrued retention liability applicable to its D&O insurance policy. The final settlement agreement will be subject to court approval.

In addition, the Company and the Director Defendants (Marc Schessel, Steven Wallitt, Charles Miller and Robert Christie) entered into a binding agreement with the shareholder derivative plaintiffs to settle the derivative litigation in which SCWorx was a nominal defendant. Under the terms of this agreement, (i) the insurers for the Director Defendants will make a cash payment to legal counsel for the shareholder derivative Plaintiffs to cover their legal fees and (ii) the Company will adopt certain corporate governance reforms within 60 days of court approval of the settlement, in exchange for which all parties will be released from all claims related to the derivative class action litigation. This agreement provides that the parties will negotiate in good faith to enter into a definitive settlement agreement within thirty days, which agreement will be subject to court approval.

"One of my primary goals since becoming CEO of SCWorx has been to resolve the class and derivative actions and move forward with focusing on our core data management business," said Tim Hannibal, Chief Executive Officer of SCWorx. "I would like to thank our Board, management team and legal counsel in helping to achieve these goals and put these issues behind us. We look forward to continuing to deliver our SaaS service offerings to healthcare providers as they struggle with the difficulties caused by Covid-19. Our service offerings help solve the challenges which hospitals experience within their supply chain and deliver the analytics and visibility to achieve desired cost savings."