Tag Archives: corporate governance

Blockchain Technology and Delaware Corporate Law

The Delaware General Corporation Law was amended last summer to allow companies to maintain their corporate records using blockchain technology. The purpose of this short post is to provide a high-level overview of this evolving intersection of technology and corporate law that will have an increasingly profound impact on corporate governance and related areas of the … Continue Reading

Chancery Discusses Revlon in Context of Granting Option to Sell Company

The Delaware Court of Chancery addressed a bevy of basic corporate litigation principles in the context of claims challenging the actions of directors, and determining which standards of review apply, and which procedural prerequisites need to be satisfied. In Carr v. New Enterprise Associates, Inc., C.A. No. 2017-0381-AGB (Del. Ch. Mar. 26, 2018), claims for … Continue Reading

Chancery Explains Safest Deal Structure to Defend M & A Challenges

Southeastern Pennsylvania Transportation Authority v. Volgenau, C.A. No. 6354-VCN (Del. Ch. Aug. 5, 2005) Issue addressed: This Chancery opinion explains the procedures to follow in order to benefit from the business judgment rule’s deferential standard of review for a merger that involves a controlling shareholder and a third-party. This decision provides a road map for … Continue Reading

Key Corporate and Commercial Delaware Decisions for First Five Months of 2013

Among the key corporate and commercial Delaware decisions that we have highlighted on these pages during the first five months of 2013, the following decisions either clarified existing Delaware law or announced new law on important substantive or procedural topics. This is a supplement to the annual review of cases we have provided on this … 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

Attorney/Client Privilege and Work Product Doctrine Again Addressed by Chancery

AM General Holdings LLC v. The Renco Group, Inc., C.A. No. 7639-VCN (Del. Ch. April 18, 2013). A prior Chancery decision in this case was highlighted on these pages at this link. Issue Addressed:  Whether the attorney/client privilege and the work product doctrine are defenses to a motion to compel. Short Answer:  They can be. … Continue Reading

Supreme Court Reverses Chancery on Collateral Estoppel/Demand Futility and Section 220 Issues

Pyott v. Louisiana Municipal Police Employees’ Retirement System, No. 380, 2012 (Del. Supr., April 4, 2013) Issues Addressed:  (1) Whether or not a prior ruling by a California court dismissing a derivative suit served as a bar to subsequent Delaware derivative suits; and (2) Whether the failure to use Section 220 before filing suit created a … 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

Chancery Grants Expedited Proceedings To Consider Appointment of Receiver or Custodian for Insolvent Company

Balch Hill Partners, L.P. v. Shocking Technologies, Inc., C.A. No. 8249-VCN (Del. Ch. Feb. 7, 2013). Issue addressed: Whether expedited proceedings should be granted to consider the appointment of a receiver or custodian for an allegedly insolvent company pursuant to DGCL Sections 291 and 226? Short answer: Yes Brief Overview This letter ruling was in … Continue Reading

Corporate Governance After the Financial Crisis

Two reviews of Professor Stephen Bainbridge’s recent book entitled Corporate Governance After the Financial Crisis, in the UCLA Law magazine and from the editor in chief of The Deal magazine, are worthwhile reading for anyone who wants to keep up to date with the leading scholarship on corporate governance by one of the country’s most well-respected … Continue Reading

Chancery Addresses Charitable Nonstock Corporations and De Facto Directors

Hockessin Community Center, Inc. v. Swift, C.A. No. 7789-VCL (Del. Ch. Oct. 5, 2012). This decision is most useful for its treatment of nonstock corporations and de facto directors, although it also features enlightening historical anecdotes about important civil rights struggles in Delaware during the early 1950s. Delaware does not have a separate statute for … Continue Reading

No Damages Proven for Breach of Fiduciary Duty by Director Leaking Data

Shocking Technologies, Inc. v. Michael, C.A. No. 7164-VCN (Del. Ch. Oct. 1, 2012). Issues addressed: (1) Whether a dissident director may leak confidential data as part of his battle with the majority of directors, without breaching the duty of loyalty? (2) When a director breaches his duty of loyalty by leaking confidential data, but no … Continue Reading

Key Corporate and Commercial Decisions in the 2nd and 3rd Quarters of 2012

Key corporate and commercial decisions that we have highlighted, with commentary, over the last few months (roughly the 2nd and 3rd quarters of 2012), are compiled at the hyperlinks below for the convenience of our readers. Supreme Court Upholds $2 Billion Judgment and $300 Million Fee Award LP Member Protected from Self-Interested Transaction by Terms of LP Agreement … Continue Reading

Supreme Court Affirms $2 Billion Judgment and $300 Million in Fees for Breach of Fiduciary Duty

The Delaware Supreme Court today, in the case of Americas Mining Corp. v. Theriault, No. 29, 2012 (Del. Aug. 27, 2012), read here, in a 110-page opinion, upheld the Court of Chancery’s 100-plus page decision awarding over $2 billion in damages based on a breach of fiduciary duty claim in connection with the sale of … Continue Reading

Chancery Decides: Not Per Se Breach of Fiduciary Duty for a Board to Fail to have a Succession Plan.

Zucker v. Andreessen, C.A. No. 6014-VCP (Del. Ch. June 21, 2012). Issues Presented (1) Whether a $40 million severance package for the CEO of Hewlett-Packard, who could have been terminated for cause, constituted corporate waste; and (2) Whether the failure of the board to have a clearly defined succession plan in place was a breach … 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

Delaware’s Director-Consent Statute Challenged by Scholar

Professor Eric Chiappinelli challenges the director-consent statute that imposes personal jurisdiction in Delaware over those who serve as directors of Delaware corporations. The good professor has published a provocative article that challenges the validity of this often invoked Delaware statute. The theory behind the so-called “consent statute” is that by virtue of agreeing to be … Continue Reading

Chancery Dismisses Breach of Implied Duty of Good Faith and Fair Dealing Claims Based on L.P. Agreement that Presumed Good Faith

In Re K-Sea Transportation Partners LP Unitholders Litigation, C.A. No. 6301-VCP (Del. Ch. April 4, 2012). The prior Chancery decision in this case was highlighted on these pages here. Issues Addressed: The issues addressed by the Court of Chancery in this matter were whether the fiduciary duty claims and the contractual claims were barred by … Continue Reading

Chancery Rejects Motion for Attorneys’ Fees Based on Complaint Mooted by Actions of Board

Freedman v. Adams, C.A. No. 4199-VCN (Del. Ch. March 30, 2012). Issue Addressed The Court of Chancery addressed the standard for awarding attorneys’ fees when there has been a stipulated dismissal of a derivative action which was largely mooted by measures taken by the defendant board of directors shortly after the complaint was served. Background The complaint … Continue Reading

Chancery Denies Motion to Dismiss Claims for Breach of Fiduciary Duty in Connection with Merger

Frank v. Elgamal, C.A. No. 6120-VCN (Del. Ch. March 30, 2012).  See summary of prior Chancery decision in this matter highlighted on these pages. Issue Addressed Whether it was premature to rule on a fiduciary duty claim based on the entire fairness standard, at the motion to dismiss stage. Answer:  Yes. Summary of Holding In this challenge … Continue Reading

Chancery Denies (Again) Injunctive Relief in Challenge to Conflicted Merger with Premium Price

In re Delphi Financial Group Shareholder Litigation, Cons. C.A. No. 7144 -VCG (Del. Ch. Mar. 6, 2012). This is the third Delaware Court of Chancery decision in as many weeks that denied injunctive relief, in an expedited opinion, in response to a challenged transaction–despite criticism in two of the cases, of the process and the players, but … Continue Reading

Shareholders Show Likelihood of Success that El Paso/Kinder Morgan Merger Process was Tainted by Disloyalty but Chancellor Denies Request for Injunctive Relief

Chancellor Strine in  In Re El Paso Corporation Shareholder Litigation, Consol. C. A. No. 6949-CS (Del. Ch. Feb. 29, 2012), denied the stockholder plaintiffs request for a preliminary injunction to enjoin a merger between El Paso Corporation and Kinder Morgan, Inc.  While the Court in a 33-page opinion, severely criticized the actions of a number of the players, in the end … Continue Reading
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