Selling Corporation Lacked Standing to Make Post-Merger Claim for Selling Shareholders
HLSP Holdings Corp. v. Fortune Management, Inc., Del. Super., C.A. No. 08C-08-175 WCC (March 31, 2009), read opinion here. This Delaware Superior Court decision granted a summary judgment motion to the defendant purchaser in connection with a claim that a merger agreement was breached because the purchaser did not take all necessary actions to cause the stock to be registered and freely tradeable on the stock exchange until a date after the stock price declined sharply. The motion for summary judgment was granted because the court determined that the plaintiff, the selling corporation, did not have standing to bring the suit because the damages suffered were by the individual shareholders, as opposed to the corporation itself--and the individual shareholders were not named as parties. The plaintiff corporation never had the right to sell the stock and thus any alleged injuries would have been suffered by the individual shareholders only. Thus, the court concluded that the failure to promptly register the stock had no economic effect upon the plaintiff corporation which was required to transfer the stock to its individual shareholders.
