A national banking association is seeking court intervention after alleging that a stock transfer agent failed to register nearly 3.4 million shares of corporate stock in its name following a foreclosure sale, a move the bank claims has resulted in financial losses and hindered its rights as owner.
According to a complaint filed on May 7, 2026, in the United States District Court for the Eastern District of New York by BMO Bank, N.A., defendant VStock Transfer, LLC is accused of refusing to process the registration of 3,439,803 shares of Atlantic International Corp. (ATLN) stock acquired by BMO through a valid foreclosure sale.
The dispute centers on BMO’s purchase of ATLN Shares after borrower IDC Technologies, Inc. defaulted under an ABL Credit Agreement dated August 31, 2021. As part of that agreement and related pledge documents, IDC granted BMO a security interest in certain collateral including the ATLN Shares. After IDC’s default, BMO exercised its post-default remedies and conducted a public auction for the collateral on April 28, 2025. At this auction, BMO was the highest bidder and acquired ownership rights to the ATLN Shares.
BMO states that its acquisition was formalized through a Purchase Agreement and Transfer Statement signed by all relevant parties including Atlantic International Corp., which acts as issuer of the shares. The filing highlights that Atlantic expressly agreed it would comply with BMO’s instructions regarding these shares and granted BMO power of attorney to take necessary actions to facilitate their transfer.
Despite these agreements and multiple written demands from BMO’s counsel starting May 22, 2025—including submission of required forms—VStock allegedly did not complete the registration process. The complaint details repeated follow-ups throughout mid-2025 and into early 2026. On March 24, 2026, VStock formally refused to register the shares in BMO’s name unless additional conditions were met such as express instruction from IDC or indemnification for VStock and Atlantic.
BMO argues that under Article 8 of the Uniform Commercial Code (U.C.C.), specifically sections applicable in Delaware and New York due to Atlantic’s incorporation in Delaware and VStock’s business location in New York, VStock has an obligation as transfer agent to register securities transfers when statutory requirements are satisfied. The bank asserts it has provided all necessary documentation demonstrating its authority—including powers of attorney from both IDC (the former owner) and Atlantic (the issuer)—and reasonable assurances as required by law.
The complaint further claims that VStock’s refusal has caused material harm: “VStock’s delay and refusal have harmed BMO because the value of the ATLN Shares has materially decreased to BMO’s detriment during the time VStock has refused to complete the transfer.” Additionally, it states that this refusal has prevented BMO from exercising ownership rights such as holding or selling the shares.
BMO seeks several forms of relief from the court: declaratory judgments affirming its authority under both pledge agreements and transfer statements; confirmation that no further authorization or indemnity is required; an order directing VStock to register the ATLN Shares in book-entry form without restriction; cooperation with any additional administrative steps needed for removal of restricted legends; damages for losses incurred due to delay; reimbursement for costs including legal fees; pre-judgment and post-judgment interest; as well as any other relief deemed just by the court.
The plaintiff is represented by John J. Kuster at Sidley Austin LLP in New York City. The case is identified as Civil Action No. 2:26-cv-2757.
Source: 226cv02757_BMO_Bank_NA_v_VStock_Transfer_LLC_Complaint_Eastern_District_New_York.pdf