In Todd Swift v. Houston Wire & Cable Co., C.A. No. 2021-0525-LWW, memo. op. (Del. Ch. Dec. 3, 2021), the Court of Chancery found that a stockholder lacked standing to seek inspection of books and records under 8 Del. C. § 220 because he filed suit after his shares were cancelled in a merger. This decision represents a continuation of the approach articulated in Joe Weingarten v. Monster Worldwide, Inc., C.A. No. 12931-VCG, memo. op. (Del. Ch. Feb. 27, 2017). In Monster, Vice Chancellor Glasscock found that stockholders who held stock at the time they filed suit retained standing even if the stockholder was squeezed out in a merger; however, a stockholder who brought suit post-merger lacked standing. Houston Wire favorably relied upon Monster.
In Houston Wire, the stockholder’s shares were canceled at a defined effective time, rather than at closing as in Monster. The effective time was defined as the time that the certificate of merger was filed with the Secretary of State. The plaintiff-stockholder’s complaint was filed three hours after the certificate of merger was filed with the Secretary of State. The stock, however, continued to trade on Nasdaq until the end of the day. Vice Chancellor Will granted defendant’s motion to dismiss on the basis that the plaintiff-stockholder lacked standing to sue under Section 220.