Showing 28 posts in Dissolution.
Court of Chancery Denies Request for a Receiver
Banet v. Fonds de Regulation et de Controle Cafe Cacao, C.A. 3742-CC (Del. Ch. Feb. 18, 2009)
This is an excellent summary of the law governing when the Court of Chancery will appoint a receiver for either an insolvent or a solvent corporation. For example, only when there is a grave risk of serious harm to the entity will the Court appoint a receiver for a solvent Delaware corporation.
ShareCourt of Chancery Upholds LLC Dissolution Provision
Spellman v. Katz, C.A. 1838-VCN (Del. Ch. Feb. 6, 2009)
In drafting an LLC operating agreement, the key point to remember is that you get what you agreed to even if you later come to regret it. Here, the operating agreement included a provision that the LLC would be dissolved when certain events occurred. When those events occurred, one of the members claimed that he never intended the LLC would then be dissolved. Too bad said the Court and ordered dissolution and winding up.
ShareCourt of Chancery Dissolves a Deadlocked LLC
Fisk Ventures, LLC v. Segal, C.A. 3017-CC (Del. Ch. Jan. 13, 2009) It has long been established that a limited partnership may be dissolved when a deadlock makes it impossible to carry on the partnership business. Here the Court of Chancery applied that same law to an LLC as the statute also provides for a judicial dissolution when it is "not reasonably practical to carry on the business" for which the entity was created.
Court of Chancery Affirms Limitations Period for Dissolved Entity
In the Matter of Dow Chemical International Inc. of Delaware, C.A. 3972-CC (Del. Ch. Oct. 14, 2008)
This decision has a good outline of when the right to sue a Delaware corporation expires after it is dissolved. The basic rule is that after three years no suit may be filed. Exceptions may exist for entities that still have undistributed assets and when a receiver is appointed for those entities.
ShareCourt of Chancery Denies Application for Receiver
Weir v. JMACK Inc., C.A. 3263-CC (Del. Ch. Sept. 23, 2008)
This decision repeats the settled Delaware law that the Court of Chancery will not appoint a receiver for a solvent Delaware corporation absent extraordinary circumstances. Of course, having a court tell the world that your tax evasion is not "extraordinary" justification for a receiver may have been punishment enough.
ShareCourt of Chancery Refuses Dissolution of LLC
In re Seneca Investment LLC, C.A. 3624-CC (Del. Ch. Sept. 23, 2008)
This decision applies the corporate law rule that the Court of Chancery will not dissolve a solvent entity except for extraordinary reasons. Merely acting as a holding company without an active business is not even close to good enough to warrant dissolution.
ShareCourt of Chancery Upholds Statute of Repose for Dissolved Corporations
The Territory Of The Virgin Islands v. Goldman, Sachs & Co., C.A. No. 2505-VCS (December 20, 2007).
This decision upholds the law that Section 278 of the Delaware General Corporation Law ("DGCL") acts as a statute of repose to bar the filing of all litigation against a Delaware corporation after 3 years from the date of its dissolution.
As the court also notes, that means that a suit against stockholders under Section 325 of the DGCL for having received an improper liquidating distribution are also precluded under those circumstances.
ShareCourt of Chancery Stays Delaware Action In Favor of Canadian Litigation
Xpress Management Inc. v. Hot Wings International Inc., C.A. No. 2856-VCL (May 30, 2007).
Under very unusual circumstances, this decision entered a stay of a Delaware proceeding to dissolve a Delaware corporation because of prior filed litigation in Canada. While the law governing stays of Delaware litigation is very well developed, it is unusual to stay a proceeding for dissolution of a Delaware corporation. That is a particularly Delaware-based remedy that its courts are reluctant to forgo when the statutory prerequisites are met.
Here, however, the facts supporting the issuance of a stay were particularly strong. These included extensive and abusive litigation between the parties in Canada, the jurisdiction of the Canadian courts over the key assets in dispute and the existence of orders by the Canadian courts that dealt with the merits of the underlying dispute between the parties that had little to do with Delaware law.
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