Investor Sues 5&2 Studios Over Shareholder Buyout

A proposed class action in Delaware alleges The Chosen producer undervalued minority shares in a March reverse stock split.

Updated on Nov. 15, 2026 in Public Companies

Investor Sues 5&2 Studios Over Shareholder Buyout

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Do you trust big companies to treat small investors fairly when buying them out?

Investor Christopher Garabedian filed a proposed class-action lawsuit against 5&2 Studios in Delaware's Court of Chancery on June 23, 2026. The suit alleges the company improperly bought out more than 16,000 minority shareholders at a price that undervalued the company.

Why it matters

The reverse stock split eliminated minority shareholders, which would allow 5&2 to end public reporting requirements and operate as a private company. For U.S. investors, the case tests whether cash-out terms in going-private transactions fairly reflect a company's value.

The reverse split combined every 173,750 old shares into one new share, cashing out holders of fewer than that amount at $3.75 per original share. The court filing alleges that price undervalued the stock, but the claimed actual value and the outcome of the case remain unresolved.

The players

5&2 Studios

The production company behind the faith-based drama The Chosen, which funded its early seasons through crowdfunding.

Dallas Jenkins

The creator and director of The Chosen, who has led the series since its beginnings as a crowdfunded project.

The details

Shareholders owning fewer than 173,750 shares had their stock canceled and received $3.75 per original share. Garabedian, the company's largest individual crowdfunding investor and a co-executive producer on the first season, is asking the court to award former shareholders the difference between that payout and the shares' claimed actual value. Dallas Jenkins denied any wrongdoing in a July statement to the New York Times.

March 2026: 5&2 Studios carries out the reverse stock split, cashing out minority shareholders.
Holy Week 2026: The shareholder vote is scheduled.
June 23, 2026: Garabedian files the proposed class-action lawsuit in Delaware.
July 2026: Jenkins denies wrongdoing in a New York Times statement.

Market Landscape

Reverse stock splits used to take a company private and cash out minority holders have drawn fairness challenges in U.S. courts. This Delaware suit tests whether a crowdfunded media company's $3.75 cash-out price met the standard owed to those shareholders.

Shareholders who were cashed out at $3.75 per share could recover money if the court sides with the plaintiff, though the outcome is uncertain. The lawsuit is not expected to affect the show's release schedule, with Season 6 premiering on Prime Video on Nov. 15, 2026.

The takeaway

Shareholders in companies that go private should check whether a cash-out price reflects the company's value before accepting it. Reverse splits that remove minority holders can be challenged in court, as this case shows.