Professor Stephen Bainbridge, a nationally recognized corporate law scholar, provided today here a learned analysis of the duties owed to preferred stockholders, compared with common stockholders, and contrasted with bondholders. His discussion was prompted by a review here, of the Delaware Chancery Court decision In Re: Trados Incorporated Shareholder Litigation, No. 1512-CC (July 24, 2009), read opinion here, by Delaware litigator Kevin Brady.
The good professor recites and refers to the leading Delaware court decisions on this topic and argues, for example, that for policy and doctrinal reasons, one of the older cases on this issue should be discarded, i.e., Jedwab v. MGM Grand Hotels, Inc., 509 A.2d 584 (Del. Ch.1986). For anyone who needs to know about this particular topic, it’s a relatively short but pithy overview that is must reading for a complete understanding of this little corner of Delaware corporate law.