Tag Archives: duty of care

Chancery Applies Business Judgment Rule to Freezeout by Majority Shareholder

In Re MFW Shareholder Litigation, C.A. No. 6566-CS (Del. Ch. May 29, 2013). Issue Addressed: What standard of review should apply to a going-private merger conditioned upfront by the controlling stockholder on approval by both a properly empowered, independent committee and an informed, uncoerced majority-of-the-minority vote. Short Answer: When a controlling stockholder merger has, from the … Continue Reading

Delaware Fiduciary Duty of Disclosure Explained by Chancery

In re Wayport, Inc. Litigation, Cons., C.A. No. 4167-VCL (Del. Ch. May 1, 2013). Issues Addressed: Among the several issues addressed in this case, the most noteworthy is a fulsome discussion and restatement of the fiduciary duty of disclosure that directors and majority shareholders owe to other existing shareholders from whom they are purchasing or selling … Continue Reading

Chancery Addresses Right to Direct Claim for Dilution of Minority Shareholders

Carsanaro v. Bloodhound Technologies, Inc., C.A. No. 7301-VCP (Del. Ch. March 15, 2013). This 76-page Chancery decision addresses issues that include the following: (1) when a claim for dilution of minority shares can be pursued directly instead of, or in addition to, derivately; (2) restrictions imposed by DGCL Section 160 on the right to redeem … Continue Reading

Duties of Directors of Insolvent Company Addressed

Edgewater Growth Capital Partners LP v. HIG Capital, Inc., C.A. 3601-CS (Del. Ch., Feb. 28, 2013). This 70-page decision provides useful and extensive analysis of the duties of directors of an insolvent corporation and related claims against a private equity shareholder who enforced its foreclosure rights. The court dismissed the claims and found that the foreclosure … Continue Reading

Key Delaware Corporate and Commercial Decisions in 2012

Noteworthy 2012 Corporate and Commercial Decisions from Delaware’s Supreme Court and Court of Chancery. By: Francis G.X. Pileggi and Kevin F. Brady. Introduction This is the eighth year that we are providing an annual review of key Delaware corporate and commercial decisions. During 2012, we reviewed and summarized over 200 decisions from Delaware’s Supreme Court … Continue Reading

Dismissal of One Derivative Lawsuit Not Bar to Second Derivative Claim by Second Stockholder

Louisiana Municipal Police Employees’ Retirement Systems v. Pyott, C.A. 5795-VCL (Del. Ch. June 11, 2012). Issues Addressed Whether collateral estoppel, Rule 23.1 or Rule 12(b)(6) apply to require the dismissal of a Delaware derivative suit based on the dismissal in California of a related derivative suit in which a federal court granted a Rule 23.1 … Continue Reading

Court of Chancery Awards Lost Future Earnings as Damages to Hedge Fund Managers Due to Fraud of Majority Partner

Paron Capital Management LLC v. Crombie, C.A. No. 6380-VCP (Del. Ch. May 22, 2012). Issue Addressed: Whether the breach of fiduciary duty owed by a hedge fund manager to his partners entitles them to lost future earnings. Short Answer: The Court found that the partners who were defrauded were entitled to lost future earnings and other costs associated … Continue Reading

Chancery Explains Basis for Fiduciary Duty Default Standards Applicable to LLCs

Auriga Capital Corp. v. Gatz Properties LLC, C.A. No. 4390-CS (Del. Ch., Jan. 27, 2012), read opinion here. What this Case is About and Why it is Important This case establishes a high-water mark in terms of providing the most comprehensive explanation, based on legislative history and a review of Delaware cases, to explain why … Continue Reading

Delaware Chancery Court Rules on Amylin “Poison Put” Provision; Finds No Violation on Duty of Care Issue; and Provides Instruction to Lawyers Advising Boards on Complex Documents

San Antonio Fire & Police Pension Fund v. Amylin  Pharmaceuticals, Inc., No. 4446-VCL (Del.Ch., May 12, 2009), read opinion here. This Chancery Court decision addressed the issue of "poison puts" or a provision in an indenture that would have triggered an obligation of the company, and a right of noteholders,  that allowed the holders of the … Continue Reading

Delaware Supreme Court Issues Major Ruling on Shareholder Ratification Doctrine and Duties of Corporate Officers

In Gantler v. Stephens, (Del. Supr., Jan. 27, 2009), read opinion here, the Delaware Supreme Court, yesterday,  issued a major decision on important matters of Delaware corporate law. Delaware’s High Court  for the first time confirmed and clarified that officers of Delaware corporations have the same fiduciary duties as directors of Delaware corporations. In addition, … Continue Reading

Chancery Rules on Claims Related to Merrill Lynch Merger with Bank of America

 County of York Employees Retirement Plan v. Merrill Lynch & Co., Inc., et al., (Del. Ch., Oct. 28, 2008), read opinion here. This 39-page Chancery Court decision addressed in a cursory but scholarly manner, several preliminary issues related to the recently announced merger of Merrill Lynch and Bank of America. The opinion is a treasure trove of Delaware … Continue Reading