A proposed class-action is suing the Trustee of the Isagenix Employee Stock Ownership Plan. The Plan is made up of current and former Isagenix employees.

The exact number of Plan participants isn’t provided but was estimated to be just over 550 back in December 2019.

Plaintiff Shana Robertson is seeking to represent Plan participants in a proposed class action.

The named defendant in Robertson’s lawsuit is Argent Trust Company, a for-profit corporation incorporated in Tennessee.

At issue is a trade Argent executed via the Isagenix Employee Stock Ownership Plan (ESOP, “the plan”).

As per the ESOP, on June 14th, 2018,

Argent, in its capacity as Trustee of the Plan, purchased 30,000 shares of Isagenix’s preferred stock for $382,500,000, representing a 30% ownership interest in Isagenix.

The paid amount comes to $12,750 a share.

The Plaintiff former employee claims to have had no prior knowledge of the purchase.

Furthermore;

Isagenix provided financial projections to Argent for the valuation for the ESOP Transaction.

The financial projections were unreasonably optimistic.

The ESOP Transaction was structured as a purchase of preferred stock rather than common stock in order to inflate the purchase price paid by the ESOP.

On the other end of the trade were Jim Coover, Kathy Coover and Tammy Pierce.

The Coovers are Isagenix’s co-founders. Together with Pierce, they are Isagenix shareholders and sit on the board of directors.

The ESOP Transaction allowed the selling shareholders, Jim and Kathy Coover and Jim and Tammy Pierce, to cash out a portion of their Isagenix stock at a high price at a time when Isagenix’s business was deteriorating and also placed excessive debt on the company.

To fund the purchase, the Plan took out a loan with Isagenix for the purchase amount $382,500,000.

The terms of the loan would see the Plan repay Isagenix
‘over 39 years in equal
annual payments at an interest rate of 3.05%’
.

Seems a bit strange to me to borrow money from a company to buy shares in said company but the lawsuit doesn’t make anything of it.

Admittedly I’m not well versed enough in this particular area of finance to make a definitive call.

In any event, to finance the loan Isagenix turned to three investment firms.

The ESOP Transaction placed excessive debt on Isagenix.

By 2020, the Coovers and the Pierces were forced to inject $35 million into Isagenix to avoid default on the Inside ESOP Loan and the Outside ESOP Loan.

In 2020, Isagenix used this money and other funds to retire over $60 million of the principal amount of the Outside ESOP Loan at approximately sixty-five (65) cents on the dollar.

After paying $12,750 a share in June 2018;

On December 30, 2018, the Plan’s Isagenix stock was valued at $6,051.15 per share.

On December 29, 2019, the Plan’s Isagenix stock was revalued at $3,648.71 per share.

The December 29, 2019 valuation represents a decline of over 70% from the purchase price paid by the ESOP.

The lawsuit alleges,

🤖 Quick Answer

What is the Isagenix Employee Stock Ownership Plan lawsuit about?
A class-action lawsuit targets Argent Trust Company, Trustee of the Isagenix ESOP, challenging a 2018 transaction where Argent purchased 30,000 shares of Isagenix preferred stock for $382.5 million, acquiring 30% ownership. Plaintiff Shana Robertson represents approximately 550 current and former Isagenix employees in the Plan.

Who are the parties involved in the Robertson lawsuit?
Plaintiff Shana Robertson represents the class of Isagenix Employee Stock Ownership Plan participants. The defendant is Argent Trust Company, a for-profit Tennessee corporation serving as Plan Trustee. The lawsuit addresses Argent's June 14, 2018 stock transaction executed on behalf of the Plan.

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