The billion-dollar trial between Warren Buffett’s Berkshire Hathaway and the Haslam family, scheduled to begin in Delaware’s Court of Chancery on January 8, was unexpectedly canceled two days before its start.
The trial aimed to determine the value of the Haslam family’s 20% stake in Pilot Travel Centers, the largest U.S. truck stop chain.
Parties Involved and Lack of Comments:
The Haslam family, Berkshire Hathaway, and the court were unreachable for comments following the cancellation. The trial cancellation was confirmed by a docket entry authorized by Vice Chancellor Morgan Zurn, the judge overseeing the case.
Berkshire acquired 80% of Pilot in two separate deals in 2017 and January 2023. The Haslam family, which includes Cleveland Browns owner Jimmy Haslam, retained a 20% stake and had a put option to sell the remaining stake in the first two months of any year.
Accusations and Accounting Disputes:
Both sides accused each other of accounting tricks to manipulate Pilot’s earnings before interest and taxes (EBIT), affecting the value of the Haslam family’s stake. Disputes revolved around Berkshire’s adoption of “pushdown accounting” after obtaining the 80% stake, potentially impacting the put option exercise.
The trial outcome hinged on whether Berkshire was required to obtain the Haslams’ consent for the accounting change. The cancellation adds uncertainty about the resolution of the accounting disputes and the valuation of the 20% stake.
Greg Abel’s Role and Testimony:
Greg Abel, Buffett’s designated successor, and Berkshire’s vice chairman, was expected to testify during the trial. The unexpected cancellation leaves unanswered questions about the role of key witnesses and the impact on Berkshire’s leadership transition.
The trial’s cancellation follows the recent death of Charlie Munger, a Berkshire vice chairman and Buffett’s confidante. Abel’s increased responsibilities at Berkshire raise speculation about the company’s leadership dynamics.
Lack of Public Statements:
The lack of public statements from the involved parties and the court contributes to the uncertainty surrounding the trial’s cancellation. It remains to be seen whether the case will be revisited or if the parties will pursue alternative resolutions.