Judge Paul Diamond had previously blocked a group of directors from ousting Hill as chairman and CEO of the $5.7 billion-asset
company. The judge appointed a custodian to schedule an election to fill a board
vacancy to resolve a longstanding dispute between Hill and certain
investors.
The three-judge Third Circuit federal appeals court
panel ruled on Wednesday that Diamond must draft a new order letting a
group led by former Republic First CEO Harry Madonna take control of the board
and fill the vacancy.
The board had been
deadlocked for months until the unexpected death of Theodore Flacco, a Hill
supporter, gave Madonna’s group a 4-3 board majority. Madonna's group appointed the retired CEO to replace Hill as chairman.
Although the facts
of the case “are dramatic,” the appeals court wrote in its decision that issues at Republic First aren't “extreme” enough to merit Diamond’s “well-intended”
intervention.
The appeals court
determined that Madonna’s faction followed the company’s bylaws and is entitled
to find a successor for Flacco to create a 5-3 majority.
George Norcross, an investor who is leading an effort to oust Hill, said in a statement that the long-time CEO
should be placed on administrative leave while an outside firm probes the company’s related-party transactions.
The investigation has prevented Republic First from getting current on its financial statements and holding its annual meeting.
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