Delaware Business Litigation Report

Stay In Voting Case Denied By Court of Chancery

B.F. Rich Co., Inc. v. Gray, C.A. No. 1896-N (Del. Ch. December 15, 2006).

After losing a  case involving the right to vote shares that were a controlling block, the loser sought  a stay to permit an appeal to the Delaware Supreme Court. The Court of Chancery denied the stay after applying the usual standards for such stays. The decision is interesting because the Court was faced with a change in control of the Delaware entity as a result of its decision and the obvious impact that might have on corporate affairs was carefully considered by the Court.

The Court conditioned its denial of the stay on certain protections for the losing party while the case was on appeal. For example, the Court limited the disclosure of confidential information that the prevailing party might make during the appeal. This illustrates that  while a stay in such cases may be hard to win, other carefully drawn protections are available to prevent the winner from abusing the entity despite an appeal. Share