WASHINGTON--CHICAGO—A Chicago investment fund has filed a proposed class-action lawsuit accusing ServBanc Holdco, Servbank, IF Bancorp and IF Bancorp’s board of misleading shareholders into approving ServBanc’s acquisition of IF Bancorp and Iroquois Federal Savings and Loan Association.
The suit, filed by Chicago Capital Management LLC in U.S. District Court for the Northern District of Illinois, alleges proxy materials overstated what investors were likely to receive in the deal, Law360 reported.
The merger agreement initially called for IF Bancorp shareholders to receive approximately $89.8 million, or $27.20 per share, subject to adjustment based on IF Bancorp’s tangible common equity at closing, according to SEC filings and the companies’ October announcement. The proxy also described a possible special dividend if tangible common equity exceeded a $77.8-million threshold.
But the complaint alleges those representations were misleading because there was “no meaningful likelihood” IF Bancorp would clear that equity threshold due to a required loan renewal and related reserve. Two days before closing, IF Bancorp disclosed an agreement requiring a $7-million reserve tied to the loan and a $5,004,650 contingent payment fund that would be paid to shareholders only if the loan is repaid, with no guarantee any amount would be distributed, Pomerantz reported.
The deal closed March 12, with ServBanc announcing it had completed the acquisition of IF Bancorp and Iroquois Federal. SEC filings later showed IF Bancorp shares were converted into $26.40 in cash—below the earlier $27.20 figure—while Iroquois Federal branches continue operating as a division of Servbank pending a customer and data conversion expected in the fourth quarter of 2026.