Archives: Chancery Court Updates

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No Per Se Duty to Disclose Financial Statement in Closely Held Company

A recent Delaware Court of Chancery transcript ruling is notable for stating that there is no per se affirmative obligation, absent a request for stockholder action, in a closely held company, to produce financial statements. The court held, however, that under certain circumstance, for example in response to a demand under DGCL Section 220, it could … Continue Reading

Chancery Explains Policy Reasons for Awarding Advancement to Former Director

The Delaware Court of Chancery’s opinion in Marino v. Patriot Rail Company LLC, C.A. No. 11605-VCL (Del. Ch. Feb. 29, 2016), is noteworthy for providing the most detailed historical analysis and doctrinal underpinning for the legislative scheme that requires corporations under certain circumstances to provide advancement to former directors and officers, that has come along in … Continue Reading

Delaware Allows Claims Based on Extra-Contractual Statements About Merger

Allegations are commonly made that representations outside the four corners of the parties’ agreement about a merger or similar deal were untrue, and the buyer relied to his detriment on them. A recent decision from the Delaware Court of Chancery addresses the types of provisions in an agreement that could bar such claims for misrepresentation based on extra-contractual … Continue Reading

Chancery Determines that Electronically-Stored Information and Personal Emails of Directors Must Be Provided to Stockholders

The Delaware Court of Chancery published an opinion this week that interpreted a statute that gives stockholders a right to demand the “books and records” of a company, to include the right to demand electronically-stored information not only from the corporation, but also from its directors and officers. Amalgamated Bank v. Yahoo!, Inc., C.A. No. 10774-VCL (Del. Ch. Feb. 2, … Continue Reading

Chancery Awards Fees for Therapeutic Benefit Originating in a Ruling That Bylaw Amendment Not Applicable to Prior Stockholders

In a recent ruling from the bench, the Court of Chancery approved fees for a therapeutic benefit that had its genesis in a ruling from March 2015, that was previously highlighted on these pages in the matter of Strougo v. Hollander, and which determined that a bylaw amendment would not apply to former stockholders when … Continue Reading

Chancery Sounds Death Knell for Most Disclosure-Only Settlements

The Delaware Court of Chancery recently issued a seminal decision that may signal the end of (at least) most disclosure-only settlements in class action cases that challenge mergers. In Re Trulia Inc. Stockholder Litigation, C.A. No. 10020-CB (Del. Ch. Jan. 22, 2016), is must reading for those interested in class action settlements in general, and disclosure-only settlements in particular. Michael … Continue Reading

Chancery Dismisses Non-Exculpated Claim with Prejudice

In the recent Court of Chancery opinion in the matter of In re EZCORP Inc. Consulting Agreements Derivative Litigation, C.A. No. 9962-VCL (Del. Ch., Jan. 15, 2016), Delaware’s equity court explains in scholarly detail the doctrinal underpinnings of the due process rights of non-parties to a case, including members of a class that have not been certified. … Continue Reading

Chancery Clarifies Director Liability for Corporate Acts and Enforceable Provisions Barring Misrepresentation Claims

A noteworthy opinion by the Delaware Court of Chancery should be read by all those who need to be, or should be, concerned about the latest iterations of Delaware law that elucidate the circumstances in which: (1) a director may be exposed to personal liability even when ostensibly acting on behalf of a corporation in … Continue Reading

Chancery Will Decide Claims Based on Law of India

The Delaware Court of Chancery in Pipal Tech Ventures Private Limited v. MoEngage, Inc., C.A. No. 10381-VCG (Del. Ch. Dec. 17, 2015), applies the overwhelming hardship standard to deny a motion to dismiss based on a forum non conveniens argument even when the location of most of the events, witnesses and applicable law support the litigation taking place in … Continue Reading

Doctrine of Laches Bars Quasi-Appraisal Remedy

In Houseman v. Sagerman, C.A. No. 8897-VCG (Del. Ch. Nov. 19, 2015), the Delaware Court of Chancery described the form of remedy known as a quasi-appraisal. The Court of Chancery explained that quasi-appraisal is not itself a cause of action, but is instead a remedy that, where appropriate, awards stockholders damages based on the going-concern value … Continue Reading

Director Who Was Tricked into Resigning Reinstated

In Martin v. Med-Dev Corp., C.A. No. 10525-VCP (Del. Ch. Oct. 27, 2015), the Court of Chancery  invalidated the resignation of a director who was tricked into resigning from his board position, and the Court reinstated him as chairman. The Court’s opinion is also notable for its discussion of what steps must be taken for … Continue Reading

Chancery Determines that BJR Applies Instead of Revlon Standard

The Court of Chancery in the recent decision styled In re Zale Corporation Stockholders Litigation, C.A. No. 9388-VCP (Del. Ch. Oct. 29, 2015), in a rare grant of a motion for reargument pursuant to Rule 59, dismissed a financial advisor after the court had previously denied the same motion to dismiss the financial advisor. The current ruling is … Continue Reading

Chancery Enforces Covenant Not To Compete

The Chancery opinion in Revolution Retail Systems, LLC v. Sentinel Technologies, Inc., C.A. No. 10605-VCP (Del. Ch. Oct. 30, 2015), discusses many issues in connection with the breach of contract for the sale of a business. The sale involved an ongoing collaborative relationship. Although Texas law applied to many aspects of the case, the court cited … Continue Reading

Facebook’s Mark Zuckerberg Required to Follow Corporate Formalities

The Delaware Court of Chancery yesterday held, on a question of first impression, that a controlling stockholder must formally ratify a self-dealing transaction by a vote at a meeting of stockholders or by written consent in order to shift the standard of review from entire fairness to the business judgment rule.  In Espinoza v. Zuckerberg, … Continue Reading

Chancery Dismisses Challenge to Board Decision to Settle Claims

In Shaev v. Adkerson, C.A. No. 10436-VCN (Del. Ch. Oct. 5, 2015), the Delaware Court of Chancery dismissed claims for breach of fiduciary duty including the disclosure obligations of the board which granted stock units valued at approximately $35 million in connection with its decision to settle potential claims that could have been brought for … Continue Reading
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