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Court of Chancery Denies Stay In Books and Records Case

Wynnefield Partners Small Cap Value L.P. v. Niagara Corp., C.A. 1261-N, 2006 WL __________ (Del. Ch. Aug. 9, 2006). The normal rule in a books and records case is that a stay of the inspection will be granted when there is an appeal. In this case, however, the Court of Chancery denied a stay because the records related to a stockholder meeting that was about to occur. Subsequently, the Supreme Court granted the stay of inspection but ordered an expedited appeal to be able to issue an opinion before the stockholders' meeting. The Chancery opinion is interesting because of the way it balances the rights of the parties. When denying the stay, the Court also limited the inspection to the plainiff's attorney only. This effectively preserved the company's right to maintain its confidences while it was appealing the decision to grant inspection. Of course, the Supreme Court saw it differently to grant an expedited appeal. Share

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