Archives: Chancery Court Updates

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Chancery Finds Breach of Fiduciary Duty But No Damages

In connection with analyzing claims that certain defendants aided and abetted breaches of the directors’ fiduciary duties, a recent Court of Chancery opinion provides an exemplary recitation of important fundamental principles of Delaware corporate law. The court’s decision in the case of In re PLX Technologies Inc. Stockholders Litigation, Cons. C.A. No. 9880-VCL (Del. Ch. Oct. 16, … Continue Reading

Chancery Imposes Anti-Suit Injunction to Enforce Forum Clause

In connection with a business divorce involving several inter-related entities and two key agreements among the parties that impacted the issues disputed, the Delaware Court of Chancery in Village Green Holding, LLC v. Holtzman, C.A. No. 2018-0631-TMR (Del. Ch. Oct. 5, 2018), enforced the forum selection clause that selected Delaware courts, and imposed an anti-suit injunction to prevent … Continue Reading

Chancery Allows Termination of Merger Agreement Based on Material Adverse Change

The Delaware Court of Chancery recently issued an epic decision that serves as a mini-treatise on several topics of importance to corporate and commercial litigators including: (1) interpretation of material adverse change clauses or material adverse effect clauses in merger agreements; and (2) the meaning and application of the phrase “commercially reasonable efforts” or “reasonable best … Continue Reading

Chancery Rules on Two Covenants Not to Compete

In the first of two decisions on the same day addressing two separate covenants not to compete, in Lyons Insurance Agency, Inc. v. Wilson, C.A. No. 2017-0092-SG (Del. Ch., Sept. 28, 2018), the Delaware Court of Chancery explained the essential elements for enforceability of a non-competition provision in an agreement. The second case highlighted below deals with … Continue Reading

Chancery Remedies Fraudulent Inducement in Formation of New Entity

A recent Delaware Court of Chancery decision provided remedies in connection with the formation of a business entity by two entrepreneurs based on the court’s finding that the equity, and employment agreement, given to one of the businessmen was based on fraudulent representations. Trascent Management Consulting, Inc. v. Bouri, C.A. No. 10915-VCMR (Del. Ch. Sept. 10, … Continue Reading

Chancery Filings Now Due at 5:00 p.m. Eastern Time in Non-Expedited Cases

As foreshadowed earlier in a post about a recent Delaware Supreme Court Order whose purpose was to promote a better work-life balance for lawyers and their staff, the Court of Chancery recently amended its Rule 79.2 to require most filings to be made by 5:00 p.m. Eastern Time in non-expedited cases. This does not apply to initial filings … Continue Reading

Few Court Filings Meet Confidentiality Requirements

For those who need to understand the prerequisites for, and limitations of, maintaining court filings as confidential, the recent Delaware Court of Chancery opinion must be read in the matter styled:  In re Appraisal of Columbia Pipeline Group, Inc., Cons. C.A. No. 12736-VCL (Del. Ch. Aug. 30, 2018). Issue addressed: This decision describes when documents … Continue Reading

Chancery Interprets Certificate of Designations for Preferred Stock Rights

A recent Delaware Court of Chancery decision provides many useful statements of Delaware corporate law. The opinion in the matter of  Cedarview Opportunities Master Fund, L.P. v. Spanish Broadcasting System, Inc., C.A. No. 2017-0785-AGB (Del. Ch. Aug. 27, 2018), extends to 57-pages, but for purposes of this short blog post, I intend to highlight only … Continue Reading

LLCs are Not Only Creatures of Contract

The Delaware Court of Chancery recently addressed the challenged removal of an LLC manager and the validity of written consents. In Godden v. Franco, C.A. No. 2018-0504-VCL (Del. Ch. Aug. 21, 2018), the court explained several important principles that the Delaware courts use to analyze issues in the LLC context and interpretive rules involving LLC … Continue Reading

Right to Redeem Shares Survived Merger

The Court of Chancery in a recent decision addressed the issue of whether a “put right” that a company did not have sufficient funds to honor when exercised, was enforceable against the surviving company after a merger when the surviving company had the funds needed. The Court of Chancery answered this question in the affirmative … Continue Reading

Chancery Rejects TRO Request to Enjoin Defamatory Statements

The Delaware Court of Chancery, relying on precedent, rejected a request for a TRO to enjoin future defamatory statements by one business partner against another, primarily because of constitutional principles prohibiting prior restraint of free speech rights protected by the First Amendment–especially in the procedural posture of a preliminary injunction or TRO, without a full … Continue Reading

Application of Revised MFW Framework

A recent post on the Harvard Law School Corporate Law Blog, (on which I have published several articles as a contributing author), reviewed the Court of Chancery’s decision in Olenik v. Lozinski, C.A. 2017-0414-JRS (Del. Ch. July 20, 2018), in which a modification of the “ab initio” requirement of the MFW framework was applied in order for the … Continue Reading

Court Describes Required Pretrial Disclosure of Scope of Expert Testimony/Opinions

A recent decision of the Delaware Court of Chancery provides clarification on the amount of pretrial disclosure required in order for an expert’s testimony at trial not to be stricken. Project Boat Holding, LLC v. Bass Pro Group, LLC, C.A. No. 12606-VCS (Del. Ch. Aug. 10, 2018).  This opinion addresses a point of practical importance not only … Continue Reading

Chancery Denies Motion to Dismiss Earn-Out Claim Due to Ambiguity

One of the more common forms of commercial litigation continues to be disputes regarding earn-out formulas for post-closing payments due if certain milestones are met.  The Delaware Court of Chancery decision in Fortis Advisors LLC v. Stora Enso AB, C.A. No. 12291-VCS (Del. Ch. Aug. 10, 2018), involved a motion to dismiss earn-out claims.  Background: The … Continue Reading

Chancery Provides Comprehensive Explanation of the Broad Scope and Flexibility of its Equitable Remedial Powers

The most comprehensive description in a Delaware decision in several decades of the broad and flexible authority of the Court of Chancery to fashion an appropriate customized equitable remedy was provided, with bountiful citations to authority and treatises, in the recent decision styled In Re Oxbow Carbon LLC Unitholder Litigation, C.A. No. 12447-VCL (Del. Ch. Aug. … Continue Reading

Chancery Instructs on Anti-Reliance Clauses that Bar Extra-Contractual Fraud Claims

The Delaware Court of Chancery recent provided explicit guidance to drafters of M&A agreements and those that litigate such agreements, to the extent that it provides clarion instruction on the prerequisites for contractual clauses that will bar extra-contractual claims for fraud. In the case styled ChyronHego Corporation v. Wight, C.A. No. 2017-0548-SG (Del. Ch. July 31, … Continue Reading

Chancery Explains Limitations on Right of Directors to Corporate Information

In the latest iteration of the ongoing litigation involving CBS Corporation and its controlling stockholder, the Court of Chancery recently provided a textbook summary of the general rule that directors have the right to unfettered access to corporate data, with three general exceptions. In the case styled In re CBS Corporation Litigation, Consol. C.A. No. … Continue Reading

Court of Chancery Explains the Phrase “Sound Business Practices” in L.P. Agreement

A recent Delaware Court of Chancery opinion explained the meaning of undefined terms in a limited partnership agreement which required the general partner in the Limited Partnership to use “best efforts” and “sound business practices.” In connection with claims that the general partner breached the agreement, the court in Wenske v. Blue Bell Creameries, Inc., … Continue Reading
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