A group of Emmis Communications Corp. preferred shareholders, unhappy with a company proposal that would strip them of their right to collect millions of dollars in dividends, filed a lawsuit against the Indianapolis media firm Monday to try to prevent the move.

Preferred shareholders Kevan Fight, Corre Opportunities Fund, Zazove Associates, DJD Group and First Derivative Traders filed a civil action in U.S. District Court alleging Emmis CEO Jeff Smulyan and the company’s board of directors ignored Securities and Exchange Commission rules, failed to file proper documentation, engaged in back-room deals and are illegally attempting to squelch their rights.

The plaintiffs are seeking a preliminary injunction preventing Emmis from holding a special meeting where investors would vote on the plan to weaken preferred shareholders' rights. Emmis said in an SEC filing Monday that it expects to hold that vote in May.

“We believe the allegations in the [lawsuit] are scurrilous and completely without merit," Emmis said in a written statement. "We intend to vigorously defend our actions, and protect the interests of the hundreds of Emmis shareholders from the unreasonable and irrational demands of the few.”

The struggling media company hopes to rekindle interest in its slumping common shares, in part by freeing itself of the obligation to pay four years of dividends to the holders of preferred stock.

Emmis says it amassed voting control over 61 percent of the preferred stock as a result of a buyback program it launched last fall with $35 million in funding from Chicago financier Sam Zell. The company purchased those shares at a huge discount from holders worried over the company's perilous finances.

The changes to be voted on at the special meeting require approval of two-thirds of the preferred shares, a threshold the company has reached by donating shares to an employee benefit trust.

Preferred shareholders say Emmis' plan is illegal, in part because it relies on voting shares that the company retired through buybacks.

“Emmis devised a plan to repurchase the shares yet keep the vote alive," the lawsuit says.

The company late last month filed its own lawsuit asking a court to declare its restructuring plan legal.

Emmis common shares are fetching around 83 cents a piece. NASDAQ has been threatening to delist the shares because they have closed below the $1 threshold since July.

At the special shareholders meeting, Emmis also is asking shareholders to authorize a reverse-stock split that would lift the price of common shares above $1 and prevent delising.

Emmis owns 17 FM and two AM radio stations nationwide, and seven city and specialty magazines. Locally, it operates WFNI-AM 1070, WIBC-FM 93.1, WLHK-FM 97.1 and WYXB-FM 105.7, as well as Indianapolis Monthly magazine.