A recent Delaware Court of Chancery decision addressed claims that the CEO of a closely-held company breached the duty of loyalty in connection with unauthorized personal expenses charged to the company, and other actions, while he managed the company–that were not consistent with financial management in the best interest of the company. That decision, in
Chancery Addresses Dilution Claim and Duty to Debt Holders
In Re Nine Systems Corporation Shareholders Litigation, Consol., C.A. No. 3940-VCN (Del. Ch. Feb. 28, 2013).
Issues Addressed: (1) Whether a dilution claim could be pursued directly instead of derivatively; and (2) Whether fiduciary duties were owed to debt holders. Answers: (1) Yes; (2) No.
Short Overview
Prior decisions by the Court
The Borders of Revlon Duties
In re Synthes, Inc. S’holder Litig., C.A. No. 6452-CS (Del. Ch. Aug. 17, 2012). This recent opinion by Chancellor Leo Strine, Jr. from the Court of Chancery includes a discussion of the contours of fiduciary duties that were announced many years ago in the Delaware Supreme Court’s Revlon decision. Professor Stephen Bainbridge has already
Court of Chancery Clarifies Rights of Minority Shareholders Whose Equity is Diluted
Dubroff v. Wren Holdings, LLC, C.A. No. 3940-VCN (Del. Ch. Oct. 28, 2011), read 45-page opinion here. See prior Chancery decisions in this case highlighted on these pages here and here.
Issues Addressed
The issues addressed in this gem of an opinion include: (i) whether and when a minority shareholder’s claim for breach
Top 5 Delaware Cases from 2008–Rebuttal to Professor Brown
Last year, I replied to Professor J. Robert Brown’s list of the top 5 Delaware cases that, in his view, supported his negative perspective of Delaware law that remains the constant refrain on his blog called: The Race to the Bottom.
My introductory explanation from my rebuttal of last year was as follows:
… I realize that there are many
Delaware Supreme Court’s 1971 opinion in Sinclair Oil v. Levien, Subject of Law Review Article
Courtesy of Professor Bainbridge is a link to an article by Professor Bob Thompson on the seminal Delaware Supreme Court decision in Sinclair Oil v. Levien, from 1971, that addressed key issues of fiduciary duty and judicial review standards. Here is an excerpt from a quote that Professor B. included in his post about the