Showing 3 posts from June 2019.

Chancery Finds Former Limited Partner Lacks Standing to Seek Books and Records

Greenhouse v. Polychain Fund I LP, C.A. No. 2018-0214-JRS (Del. Ch. May 29, 2019).

Seeking to inspect an entity’s books and records to value an investment typically is a proper purpose. But a plaintiff must have standing to demand inspection. More ›

Chancery Addresses the Direct and Derivative Claim Distinction and Demand Futility in the LLC Context

Stone & Paper Investors LLC v. Blanch, C.A. No. 2018-0394-TMR (Del. Ch. May 31, 2019).

Plaintiff sued Defendants, who were supposed to manage the parties’ limited liability company, directly and derivatively for breaching the LLC agreement, and derivatively for breaching their fiduciary duties.  In this decision, the Court of Chancery denies Defendants’ motion to dismiss and addresses, among other things, the direct versus derivative claim distinction under the Tooley test and demand futility under the Aronson v. Lewis test in the LLC context. Here, the LLC managers were deemed interested because they stood on both sides of the challenged transactions—i.e., the allegations that they stole millions from the LLC for themselves, for their other companies, for one of their spouses, and for one of their spouses’ companies. Thus, demand was futile as to the derivative claims, which also adequately stated viable causes of action under less stringent Rule 12(b)(6) standards.

Chancery Finds Advancement Decision Not Immediately Appealable When Reasonableness Disputes Remain

Sider v. Hertz Global Holdings Inc., C.A. No. 2019-0237-KJSM (Del. Ch. Jun 17, 2019).

Prior to this ruling, no Delaware opinion had addressed the question of whether decisions granting entitlement to advancement rights are immediately appealable even though disputes remain as to the reasonableness of the fees. This ruling finds the answer normally should be “no.” More ›