Lawyers for Evangelos Pistiolis-led Top Ships are redoubling their efforts to persuade a judge to throw out a securities fraud lawsuit over the shipowner’s dealings with Kalani Investments.

The case is one of three shareholder lawsuits focused on financing of Greek shipowners by Kalani, a firm based in the British Virgin Islands and controlled by Toronto-­based Marc Bistricer and his hedge fund, Murchison Ltd.

Top Ships’ lawyers are seeking to have claims against the New York-­listed company thrown out with prejudice, asking the court to bar any further amended complaints.

No traditional sources

Lawyers from the New York and Boston offices of Wilmer Cutler Pickering Hale & Dorr first moved to dismiss the complaint in April, arguing that the owner engaged in necessary and well-disclosed ­actions to secure capital where it could in a market downturn as more traditional sources of funding were not available.

After opposition to the dismissal motion from plaintiffs, the Top Ships lawyers are pressing District Judge Brian Cogan in New York’s Eastern District federal court to extinguish the claims with no possibility of revival.

“The plaintiffs’ claims stem from the premise that the Top Ships defendants and Kalani Investment Ltd had an ‘undisclosed agreement’ to engage in repeated stock issuances and reverse stock splits — all as part of an alleged ‘scheme’ with an undisclosed ‘true purpose’ of ‘enriching themselves’ at the expense of other shareholders,” they wrote to the judge.

“But [plaintiffs fail] to identify any well-pleaded allegations ... to support the existence of such an ‘undisclosed agreement’ or any undisclosed ‘true purpose’ for under­taking the challenged share issuances and reverse stock splits. The complaint is devoid of any details about the purported agreement.”

The plaintiffs’ claims stem from the premise that the Top Ships defendants and Kalani Investment Ltd had an ‘undisclosed agreement’ to engage in repeated stock issuances and reverse stock splits ... with an undisclosed ‘true purpose’ of ‘enriching themselves'

Battle of details

The shareholders have previously alleged that between November 2016 and April 2018, the shipowner expanded from 5.7 million to the equivalent of 3.06 trillion common shares, ­destroyed 99.9995% of shareholder value, pocketed $90m in the ­process and grew its fleet with purchases from Pistiolis’ private interests.

But Top Ships’ lawyers contended that all details of the arrangement with Kalani and, later, a ­separate firm called Crede Capital Group were fully disclosed in ­filings with the US Securities and Exchange Commission (SEC).

So were any arrangements ­between Top Ships and Pistiolis, or his private companies, that resulted in payments from Top Ships’­coffers, lawyers argued.

The other two shareholder lawsuits alleging securities fraud against New York-listed shipowners also remain alive as they creep their way through the US federal courts.

Dates for next proceedings in complaints filed against George Economou’s DryShips and the owner formerly known as Diana Containerships — since renamed Performance Shipping — have been pushed to September and ­October, respectively.

Shares scheme allegations

The complaints from different shareholder plaintiffs argued that the three shipowners engaged in a scheme to sell discounted shares to Kalani that diluted most of the companies’ equity value, in combination with a series of reverse stock splits to prop up price per share.

Defendants in effect hid Kal­ani’s role as an underwriter while bringing in millions of dollars to the companies and their principals, the plaintiffs alleged.

The legal skirmishing in the separate cases against DryShips and Diana Containerships follow similar lines as the Top Ships case.

Both have dismissal motions pending before the New York ­federal courts.The next status conference in the case of DryShips — which raised by far the most through the Kalani relationship at $700m — is scheduled for 5 September before Judge Sandra Feuerstein in the Eastern District of New York.

A similar conference in the case of Diana Containerships — which claims it raised only $141,000 through Kalani — is scheduled for 10 October.

DryShips and Top Ships have said they are cooperating with subpoenas from the SEC in connection with the Kalani transactions.