Court of Chancery Sustains Complaint Attacking Settlement
Kosseff v. Ciocia, C.A. No. 188-N, 2006 WL 2337593 (Del. Ch. Aug. 3, 2006).
In this decision, the Court dealt with a complaint attacking the transaction implemented to settle a proxy contest. The proxy contest was settled by an agreement that put the dissidents on the board and had the CEO resign. However, the CEO was given the right to buy certain lucrative businesses of the company, a right he later exercised. The complaint alleged that this deal was improvident. After reviewing the complaint, the Master declined to grant a motion to dismiss.
The Court was influenced by the haste with which the settlement agreement had been achieved, the lack of any independent advisers and the absence of a special committee to review the settlement. Noting that the board members who voted for the settlement thereby retained their position on the board, the Court felt there were enough facts to warrant sustaining the complaint under the familiar Aronson