Klein v. Greenbrook TMS: $800K Settlement and Promissory Note

Greenbrook TMS Inc. settled Benjamin Klein’s Delaware lawsuit in August 2024 by paying him $800,000 in cash, transferring its 12 New Jersey transcranial magnetic stimulation treatment centers to him, and covering roughly $110,655 in outstanding payroll taxes. In exchange, Klein returned 11,634,660 Greenbrook common shares for cancellation and dismissed all claims with prejudice. The Klein v. Greenbrook TMS settlement resolved a fraud and breach-of-contract dispute stemming from Greenbrook’s 2022 acquisition of Klein’s company, Success TMS.¹

How the Dispute Started

Klein founded his first TMS clinic in Florida in 2018 and grew it into a chain operating as Success TMS.² Greenbrook closed its acquisition of Success TMS on July 14, 2022. Klein and the other sellers received 8,725,995 Greenbrook common shares (worth about $11.8 million at closing) with an additional 2,908,665 shares held in escrow to cover working capital adjustments and indemnity claims.³

Klein joined Greenbrook as chief operating officer and took a seat on the board. Less than a year later, on May 4, 2023, Greenbrook terminated him as COO.⁴

What Klein Alleged in Delaware

Later that same month, Klein and several associated entities, including Success Behavioral Holdings and Theragroup LLC, filed suit in the Superior Court of Delaware against Greenbrook, its subsidiary TMS NeuroHealth Centers, and certain executives. The case was docketed as C.A. No. N23C-05-240.⁵ The complaint alleged contractual fraud, breach of representations and warranties in the acquisition agreement, and breach of the implied covenant of good faith and fair dealing.⁴ Greenbrook denied the claims and said it was evaluating counterclaims. In November 2023, both sides agreed to stay the case for up to six months to attempt a resolution.⁶

What Each Side Got in the August 2024 Deal

On August 9, 2024, Greenbrook announced a comprehensive settlement with Klein and his co-plaintiffs, which also included Batya Klein and The Bereke Trust.¹ The economic terms:

A cash payment of $800,000, structured as a $200,000 initial payment on August 15, 2024, followed by monthly installments of roughly $66,667 running from September 2024 through May 2025.¹
Transfer of Greenbrook’s 12 New Jersey TMS treatment centers to Klein through an assignment and assumption agreement covering leases, contracts, and related assets.¹
Payment of approximately $110,655 in outstanding payroll taxes owed by Check Staffing LLC for tax periods ending June 30, 2020 and December 31, 2020, along with any related interest and penalties.⁵
Return of 11,634,660 Greenbrook common shares for cancellation, made up of the 8,725,995 shares Klein held directly and the 2,908,665 shares that had been in escrow since the acquisition. With Greenbrook trading at $0.06 on the OTCQB, those shares were worth roughly $698,000 on paper. After cancellation, Greenbrook’s outstanding common share count fell to 33,967,600.⁵⁷

Terms Beyond the Money

Neither party admitted liability. All claims, counterclaims, and appeals were dismissed with prejudice, and the parties signed mutual releases.¹ The agreement contained a non-disparagement clause and a confidentiality provision, subject to Greenbrook’s right to file the agreement with securities regulators in Canada and the United States as required.⁵

The installment structure had teeth. If Greenbrook missed a payment and failed to cure the default, Klein could enforce a consent judgment for the remaining balance plus 5% annual interest and legal fees.⁵

The Separate Promissory Note Case

The Delaware fraud suit was not Klein’s only litigation against Greenbrook, and the two matters are easy to confuse. In April 2023, Batya Klein, as trustee of a trust connected to Kenneth S. Klein, filed a breach-of-contract complaint in the Superior Court of New Jersey (Bergen County) over a promissory note worth about $2.09 million issued as part of the Success TMS deal. The complaint alleged Greenbrook had defaulted and demanded acceleration of the full balance. Greenbrook’s jurisdictional motion to dismiss was denied in August 2023.⁸

That note action settled separately in November 2023 for approximately $2.2 million, paid as $250,000 upfront plus weekly $75,000 installments through May 1, 2024, with the case dismissed with prejudice.⁶

What Happened to Greenbrook After the Settlement

The company was already in serious trouble when the Klein deal closed. Greenbrook was delisted from Nasdaq in February 2024 after its share price fell below $1 and its market value dropped under $35 million.⁹ Greenbrook publicly disclosed “substantial doubt” about its ability to continue as a going concern.⁷

On December 10, 2024, Neuronetics, the manufacturer of the NeuroStar TMS device used in Greenbrook’s clinics, completed its acquisition of Greenbrook through a court-approved plan of arrangement under Ontario’s Business Corporations Act. Each Greenbrook share was exchanged for 0.01021 of a Neuronetics share, and Greenbrook became a wholly owned subsidiary before its shares came off the OTCQB.¹⁰ The combined company now trades on Nasdaq under the ticker STIM.¹¹

1
PR Newswire. Greenbrook Announces Settlement of Lawsuit With Benjamin Klein
2
BusinessWire. Greenbrook TMS Announces Closing of Success TMS Acquisition and US$75 Million Credit Facility With Madryn Asset Management
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SEC. Greenbrook TMS Inc. Annual Information Form
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PR Newswire. Greenbrook TMS Announces Receipt of Statement of Claim
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Board Room Alpha. Greenbrook TMS Settlement Agreement and Release
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PR Newswire. Greenbrook TMS Announces Settlement of Ongoing Litigation
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Stock Titan. Greenbrook Announces Settlement of Lawsuit With Benjamin Klein
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MarketScreener. Greenbrook TMS Update Regarding Ongoing Litigation With Benjamin Klein
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Behavioral Health Business. TMS Provider Neuronetics Acquires Greenbrook, Aims for Profitability in 2025
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Neuronetics IR. Neuronetics and Greenbrook TMS Announce Closing of Transaction
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Neuronetics IR. Neuronetics Reports Fourth Quarter and Full Year 2025 Financial and Operating Results