Thursday, May 26, 2022

Republic First barred from naming new chairman

Republic First Bancorp in Philadelphia has been barred from appointing a new chairman.

Judge Paul Diamond of the Eastern District of Pennsylvania ruled on Thursday that a decision to replace Vernon Hill with Harry Madonna violated state law and the $5.7 billion-asset company’s bylaws and articles of incorporation. 

Diamond also appointed Alfred Putman of Faegre Drinker Biddle & Reath to serve as custodian to assume control of Republic First, convene a special shareholder meeting by July 10 to fill a vacancy and return company control to the full board. 

The judge's ruling called the decision to remove Hill as chairman “oppressive conduct.”

"It appears that the Madonna Faction seeks to wrest immediate control of Republic First by abruptly firing executives and changing management at the very highest levels," Diamond said in his ruling. The company’s bylaws and articles of incorporation “likely do not allow these actions, which are thus ultra vires or unjust." 

Four directors ousted Hill as chairman after the sudden death of Theodore Flocco Jr., a Hill ally. Flocco's passing led to a power shift on the divided board, allowing the faction opposed to Hill to remove him.

"I look forward to continuing to work with the board and our employees and creating value for our constituents," Madonna, who was named interim chairman, said in a release announcing the change.

Republic First still faces pressure from two investor groups. 

A group led by George Norcross and George Braca has been seeking to remove Hill from his management roles.  

The Norcross-Braca group offered to buy the company on the condition that Hill is no longer involved with it. 

Driver Management, another shareholder, wants to replace three board members, including Hill. 

Republic First recently said it would need to delay its annual meeting while conducting a probe into related-party transactions, a move that has drawn objections from the investors.

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