Showing 6 posts from December 2011.
Court of Chancery Circulates Draft Practice Guidelines
Authored by Edward M. McNally
This article was originally published in the Delaware Business Court Insider | December 28, 2011
The Delaware Court of Chancery has long followed unwritten practices that knowledgeable attorneys follow. Recently, the court began circulating a draft "Guidelines to Help Practitioners Litigating in the Court of Chancery."
A product of consultation between the court and its rules committee, the guidelines are still a work in progress. They should not be cited to the court and do not set a standard of conduct or practice that the court requires be followed.
Yet a wise attorney will follow these established practices, if only to avoid unnecessary conflict with the court or appearing to be ignorant of its traditions. This is a brief summary of the 18 pages of guidelines. More ›Share
Court Of Chancery Extends Stockholder Meeting Date
Sherwood v. Chan, C.A. No. 7106-VCP (December 20, 2011)
There is nothing more sacred in Delaware corporate law than the right of the stockholders to elect directors. This decision illustrates that point and what the Court of Chancery will do when it feels that right has been improperly infringed, including extending the meeting date.Share
Supreme Court Determines Interest Award
Brandywine Smyrna Inc. v. Millennium Builders Inc., No. 53, 201 (December 9, 2011)
When a prevailing party is entitled to interest on its judgment has sometimes been confusing. This decision affirming the general right to interest clarifies Delaware law.Share
Court Of Chancery Clarifies Pleading Rules For Bad Faith Claims
Clean Harbors Inc. v. Safety-Kleen Inc., C.A. 6117-VCP (December 9, 2011)
This decision clarifies the detail that must be pled to assert a claim that the defendant acted in "bad faith." The short answer is that any set of facts that warrants such an inference is enough to state such a claim.Share
Court Of Chancery Provides More Guidance On Fee Awards
In re Compellent Technologies Inc. Shareholder Litigation, C.A. 6084-VCL (December 9, 2011)
How do you set the fee to be awarded when there is no monetary recovery in a representative action? For example, if the litigation creates a benefit to shareholders by reducing deal protection measures to permit a possible topping merger bid, but no topping bid appears, what should be the fee? Using studies that attempt to calculate the benefits of such litigation, this decision sets out a methodology to guide applicants.Share
Preferred Shareholder Must Look to Certificate of Incorporation to Prove Redemption Right, Supreme Court Reaffirms
Authored by Lewis H. Lazarus
This article was originally published in the Delaware Business Court Insider | December 7, 2011
When is a holder of preferred shares of a Delaware corporation entitled to have the corporation redeem its investment? In SV Inv. Partners LLC v. ThoughtWorks Inc., Nov. 15, the Delaware Supreme Court reaffirmed that question is answered by reference to the terms of the certificate of incorporation that establish the rights of the preferred stockholder and to the proof at trial.
At issue was a clause in the company's charter that required the company to redeem the entire amount of outstanding preferred stock "out of any funds legally available therefore and which have not been designated by the board of directors as necessary to fund the working capital requirements" of the company. The Court of Chancery had concluded that "funds legally available" meant funds that could be disbursed for redemption without violating the Delaware General Corporation Law, specifically Section 160 of the DGCL, or common law. The Court of Chancery had rejected the plaintiff's definition of "legally available funds" as meaning the same as "surplus." More ›Share