AMC Entertainment (AMC) shares bounced Wednesday night while AMC’s preferred equity units (APE) tumbled after Delaware’s Court of Chancery ruled against fast tracking a proposed settlement with shareholders that would allow a capital raise for the theater chain and meme stock.

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Late Monday, AMC Entertainment, in its SEC filing, disclosed a binding settlement with plaintiffs in the shareholder lawsuit regarding the movie theater chain’s stock conversion plan. Plaintiffs would get common shares. In return, AMC and the plaintiffs would request that a “status quo order” be lifted, allowing for the conversion of APE stock into AMC stock. AMC also would be allowed to carry out a 1-to-10 reverse stock split and have the right to sell more shares.

But lifting the status quo order needed court approval to forgo the usual process. But Court of Chancery Vice Chancellor Morgan Zurn ruled against that Wednesday, saying AMC Entertainment is moving too fast.

AMC’s lawyers had argued that the settlement was contingent on the status quo order being lifted.

AMC Entertainment issued AMC Preferred as a way to raise more capital without directly issuing more AMC common shares.

AMC stock rose 6.7% to 4.32. APE stock tumbled nearly 13% to 1.49.

On Tuesday, AMC stock plunged 23% on the share conversion settlement. APE stock leapt 13.5%.

In theory, APE stock should be worth the same as AMC stock.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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AMC Dives, APE Preferred Shares Soar On Stock Conversion Settlement