An appeals court has overturned a judge’s ruling that has kept Vernon Hill in power at Republic First Bancorp in Philadelphia.
Judge Paul Diamond had previously blocked a group of directors from ousting Hill as chairman and CEO of the $5.7 billion-asset company. The judge appointed a custodian to schedule an election to fill a board vacancy to resolve a longstanding dispute between Hill and certain investors.
The three-judge Third Circuit federal appeals court panel ruled on Wednesday that Diamond must draft a new order letting a group led by former Republic First CEO Harry Madonna take control of the board and fill the vacancy.
The board had been deadlocked for months until the unexpected death of Theodore Flacco, a Hill supporter, gave Madonna’s group a 4-3 board majority. Madonna’s group appointed the retired CEO to replace Hill as chairman.
Although the facts of the case “are dramatic,” the appeals court wrote in its decision that issues at Republic First aren’t “extreme” enough to merit Diamond’s “well-intended” intervention.
The appeals court determined that Madonna’s faction followed the company’s bylaws and is entitled to find a successor for Flacco to create a 5-3 majority.
George Norcross, an investor who is leading an effort to oust Hill, said in a statement that the long-time CEO should be placed on administrative leave while an outside firm probes the company’s related-party transactions.
The investigation has prevented Republic First from getting current on its financial statements and holding its annual meeting.