Effect of Bankruptcy on Statutes of Limitations for Appraisal
In Encompass Services Holding Corp. v. Prosero, Inc,
Del. Ch., No. 578, February 3, 2005 (Parsons, V.C.), the Chancery Court determined that the deadline for filing an appraisal action under Section 262 of the Delaware General Corporation Law was equitably tolled because the petitioner was a debtor-in-possession in Bankruptcy Court and the initial petition was filed in Bankruptcy Court because of the view that Bankruptcy Court had exclusive jurisdiction while the corporation was in bankruptcy. The Chancery Court determined that based on the facts of the case the 120 day period for filing an appraisal action after the effective date of the merger was tolled based on the filing of the claim initially in Bankruptcy Court. The Bankruptcy Court abstained and the petition was promptly filed thereafter in Chancery Court. The court reasoned that the defendant had prompt notice of the demand and that the petitioner acted reasonably and in a timely manner. This is another example of several recent cases dealing with the interface between bankruptcy proceedings and corporate law.
