Shareholders file lawsuit to halt Stamford-based Cara Therapeutics’ planned merger with …

Two shareholders have initiated legal action in New York to prevent the proposed merger between Cara Therapeutics Inc., based in Stamford, and Tvardi Therapeutics Inc. of Houston.

The merger, announced through a joint news release on December 18, detailed that it would be an all-stock transaction, with the resultant removal of Cara’s top three executives.

Shareholder approval for the deal is scheduled for April 1, with Joseph Clark and Michael Kent separately filing lawsuits in the Supreme Court of the State of New York. These legal actions were both facilitated by Richard A. Acocelli, an attorney from Acocelli Law in Southampton, New York.

The lawsuits contend that the New York court has jurisdiction based on Cara’s trading of common stock on the Nasdaq Capital Market in the state. Both lawsuits accuse Cara of issuing a “materially incomplete and misleading Prospectus” regarding the merger deal with the SEC. They claim that crucial information about Tvardi’s financial projections was omitted, preventing informed shareholder decision-making and potentially causing harm.

In response to these legal challenges, Cara filed additional information with the SEC on March 24. The company acknowledged receiving 13 requests for further details about the merger besides the two lawsuits.

Although Cara addressed the accusations of disseminating “materially false and misleading statements,” it denied any breaches of shareholder duties or legal requirements, insisting that it did not need to provide extra disclosures under statutory obligations.

Nonetheless, Cara decided to issue supplementary information to avoid the cost and disruption of litigation and maintain the merger process unhindered. Updated details revealed in the SEC filing include plans for a seven-member board post-merger, with most seats designated by Tvardi and key leadership roles filled by Imran Alibhai and Sujal Shah.

Moreover, the filing specified that Cara’s existing top executives and board members not continuing with the combined company are likely to step down. This significant reorganization is a part of the merger’s strategy to reposition leadership under new management structures.

Cara’s journey began in Tarrytown, New York, in 2004, eventually relocating to Connecticut in 2007 with state financial backing. After stints in Shelton, the company moved its headquarters to Stamford in 2015. This relocation history underscores Cara’s evolution and growth as it navigates this pivotal merger with Tvardi Therapeutics.