Chancery Appoints Amicus Curaie to Provide Independent Guidance Regarding Unopposed Petition to Revive Defunct Corporation for Use as a Blank Check Entity
The Court of Chancery has the inherent authority to appoint an amicus curaie if the Court believes it would benefit from a more fulsome presentation of the issues. This case presents that situation: an unopposed petition seeking relief that, on its face, appears contrary to the Court’s prior decisions and to Delaware’s public policy.
Synergy Management Group, LLC sought appointment of its president as custodian for Forum Mobile, Inc., a defunct entity whose shares nonetheless remained registered for public trading. Synergy planned to revive Forum and initiate a reverse merger with Forum, allowing the resulting blank check corporation to access public investment markets more quickly. The process would also avoid the cost and SEC scrutiny that would typically accompany taking a company public. Because Forum is defunct, no one opposed Synergy’s petition.
Rather than rule on Synergy’s petition, the Court appointed an amicus curaie to provide an independent view. The Court reiterated Delaware’s strong public policy against the use of its corporate law to bypass the federal securities laws and regulations. Indeed, several times in the past, the Court has declined to grant similar petitions seeking to use defunct Delaware entities as blank check companies. Here, however, the lack of adversarial briefing hindered the Court’s evaluation of Synergy’s assertions that subsequent SEC guidance had mooted the Court’s earlier concerns. This, plus the pendency of several similar petitions, led the Court to appoint an experienced Delaware attorney to investigate the SEC’s position and to provide independent guidance about whether the Court should grant the petition.