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Court Of Chancery Denies Standing After Spin-Off

In re Abbvie Inc. Stockholder Derivative Litigation, C.A. No. 9983-VCG (July 21, 2015)

After a spin–off of a subsidiary, there is a question as to whether the subsidiary’s stockholders have standing to bring a derivative suit on behalf of the subsidiary for past wrongs against the subsidiary committed by the parent’s directors. 

In deciding that in this case the former subsidiary’s stockholder did not have standing, the Court distinguished the Shaev decision that had permitted such a suit to go forward under very unusual circumstances. The key point is whether the Court is satisfied that denying standing will not prevent a serious claim from going forward.

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