Delaware Business Litigation Report

Court Of Chancery Interprets Preferred Stock Rights

Brevan Howard Credit Catalyst Master Fund Limited v. Spanish Broadcasting System Inc., C.A. No. 9209-VCG (June 27, 2014) This is another in line of cases dealing with the statutory limit of using only "legally available funds" to redeem preferred stock.  Recognizing this limit, preferred stock provisions are evolving by adding additional requirement that make the company try harder to find those funds when a redemption right accrues.  Here the Court denied a motion to dismiss when it was not clear the company had done what it committed to do to generate legally available funds. Share