Supreme Court Addresses Claims Against Dissolved Corporation
Anderson v. Krafft-Murphy Company, Inc., Del. Supr., No. 85-2013 (Nov. 26, 2013).
Issue Presented: Delaware’s Supreme Court addresses issues of first impression in this opinion, including: does Delaware’s corporation dissolution scheme (8 Del. C. Sections 278 to 282) have a “general” statute of limitations for claims by third-parties against dissolved corporations? Short Answer: No.
[Editor’s note: Yes, the case name does have a double “f” in Krafft.]
Short Overview: This opinion is must reading for anyone who seeks to file a claims against a corporation in dissolution or anyone who seeks to understand the multi-faceted statutory framework related to the procedure to dissolve a corporation. As usual, the structure of the court’s opinion makes it easy to discern the essence of the court’s holding as the following introductory quote demonstrates:
We conclude that under 8 Del. C. § 279, contingent contractual rights, such as unexhausted insurance policies, constitute “property” of a dissolved corporation, so long as those rights are capable of vesting. We further hold that Delaware’s dissolution statutes impose no generally applicable statute of limitations that would time-bar claims against a dissolved corporation by third parties. Finally, we hold that the existence of the “body corporate” continues beyond the expiration of the statutory winding-up period of 8 Del. C. § 278 for purposes of conducting litigation commenced before the expiration of that period. But, for litigation commenced after the expiration of that statutory period, a dissolved corporation may act only through a receiver or trustee appointed under 8 Del. C. § 279.
Because the judgment of the Court of Chancery rests on legal determinations inconsistent with these holdings, we reverse the judgment and remand the case for further proceedings in accordance with this Opinion.
Any attorney counseling a client on the less than obvious alternate procedures for dissolving a corporation, especially when seeking a non–judicial or judicial safe harbor for shareholders and directors, needs to read this exemplary overview of the Delaware statutory provisions. In addition, anyone advising a client who seeks to file claims against a dissolving or dissolved corporation needs to read this opinion in order to learn the latest iteration, and perhaps the best iteration of Delaware corporate law on these issues.