US Judge Again Rejects Settlement In Lawsuit Over HP's Autonomy Deal

(RTTNews) - A U.S. district court judge rejected a proposed settlement in shareholders' lawsuits over Hewlett-Packard Co.'s (HPQ) controversial $11.1 billion takeover of British software company Autonomy Corp in 2011.

District Judge Charles Breyer said the proposed settlement improperly protected the HP directors, officials and professional firms from a wide swath of potential future shareholder litigation, including some suits that might not be related to the Autonomy deal.

The rejected settlement complicates HP's attempt to move past a deal. HP's Chief Executive Officer Meg Whitman in 2012 said HP was duped into overpaying for Autonomy, because of what she said were the company's inflated financial statements. Autonomy's former CEO has repeatedly denied accusations of improper accounting.

In August 2014, U.S. District Judge slammed Hewlett-Packard Co.'s settlement reached in late June with attorneys representing its shareholders in derivative lawsuits related to its takeover of Autonomy Corp.

The Judge of U.S. District Court in San Francisco was apprehensive on the decision to dismiss claims against company officers as well as the provision for up to $48 million in fees that the attorneys would recoup for pursuing claims against ex-Autonomy executives.

The settlement deal saw attorneys representing the shareholders agree to drop all claims against board members, advisers and current and former HP officials, including CEO Meg Whitman.

However, the deal would see the attorneys assisting HP in pursuing unspecified claims against former Autonomy officials including Co-Founder and former CEO Michael Lynch and former CFO Sushovan Hussain, who claimed the settlement to be "collusive and unfair."

The three lawsuits were filed against current and past HP directors, officers and advisors after HP announced in November 2012 that Autonomy had engaged in accounting improprieties, misrepresentations and disclosure failures prior to the deal in order to extract a better deal from HP.

The Autonomy deal was disastrous and led to HP incurring a hefty $8.8 billion writedown on the deal after about 18 months of the purchase. HP linked more than $5 billion of the writedowns to accounting fraud and inflated financials by Autonomy executives.

Autonomy was charged of willfully inflating its financial statements, while HP was charged by shareholders of not scrutinizing Autonomy's financial statements properly.

Earlier in October 2014, Hewlett-Packard had announced that it planned to separate into two independent publicly traded companies, comprising Hewlett-Packard Enterprise, and HP Inc. Hewlett-Packard Enterprise would comprise HP's enterprise technology infrastructure, software and services businesses. Personal systems and printing would do business as HP Inc.