Delaware Business Dispute Blog

Review of Business and Commercial Litigation in the State of Delaware and Beyond

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Latest from Delaware Business Dispute Blog

Chancery Grants Dismissal of Claims under Revlon Standard, Citing Exculpatory Provision

September 20, 2020

In the recent decision of Rudd v. Brown, et al., C.A. No. 2019-0775-MTZ (Del. Ch. Sept. 11, 2020), the Delaware Court of Chancery granted defendants’ motion to dismiss plaintiffs’ derivative claims in their entirety in light of an exculpatory provision in the corporation’s charter. Plaintiffs’ derivative claims alleged that the company’s directors breached their fiduciary duties in connection with a $1.6 billion sale of Outerwall Inc., the owner of Redbox. Among other things, the suit…

Delaware Business Dispute Blog

Petitioning the Court of Chancery to Appoint a Custodian or Receiver to a Delaware Corporation Under Section 226 of the DGCL

By Carl D. Neff

September 12, 2020

When a Delaware corporation is deadlocked and unable to operate as a result of dissension among its shareholders or directors, or has abandoned its business, what remedies are available to the company’s shareholders under Delaware law? Section 226 of the Delaware General Corporation Law (“DGCL”) squarely addresses this issue. Under that statute, any shareholder of the corporation may petition the court to appoint a receiver to a deadlocked corporation. This article will address Section 226…

Delaware Business Dispute Blog

Delaware Judiciary Extends Emergency Until Oct. 5, 2020; Unveils Plan to Resume Trials In October

By Carl D. Neff

September 7, 2020

On Friday, September 4, 2020, the Delaware Supreme Court released a plan to restart jury trials in October, 2020, while extending the current judicial emergency an additional 30 days until October 5, 2020. The Chief Justice likewise issued Administrative Order No. 10 memorializing the same. According to the notice, the resumption of jury trials will mark a move to a modified Phase 3 of the Delaware Judiciary’s four-phase reopening plan that was released in…

Delaware Business Dispute Blog

Court Denies Motion to Seal Entirety of TRO Hearing

By Carl D. Neff

September 5, 2020

In a short, one-page order, the Court of Chancery denied a motion by defendants to seal the entirety of an upcoming TRO hearing, in the case of Searchlight CST, L.P. v. MediaMath Holdings, Inc., C.A. No. 2020-0652-SG (Del. Ch. Aug. 24, 2020). Vice Chancellor Glasscock ruled that the “Court does not conduct public hearings under seal”, referring to the concept as “oxymoronic.” However, to the extent that information disclosed at the hearing is subject…

Delaware Business Dispute Blog

Delaware Court of Chancery Rules that Management May Not Preclude Director From Obtaining Privileged Information

By Carl D. Neff

August 22, 2020

In a matter of first impression, the Delaware Court of Chancery ruled that management of a Delaware corporation may not preclude a director from obtaining privileged information of the company. The decision was handed down yesterday by Chancellor Bouchard in the ongoing WeWork litigation, styled as In re WeWork Litigation, C.A. No. 2020-0258-AGB (Del. Ch. Aug. 21, 2020). The procedural history of this action is worth noting. The lawsuit was filed by The We…

Delaware Business Dispute Blog

Delaware Court of Chancery Holds that Internal Affairs Doctrine Governs Books and Records Demand; Applies Delaware Law Instead of California Corporations Code

By Carl D. Neff

August 16, 2020

Section 220 of the Delaware General Corporation Law permits a stockholder or director to make a books and records against a corporation incorporated in Delaware, regardless of where the corporation conducts its business. Yet many jurisdictions have their own inspection statutes, some of which govern not only entities incorporated or formed in that state, but also foreign entities that have a principal place of business in the state, even if incorporated elsewhere, such as Delaware.…

Delaware Business Dispute Blog

Delaware Judicial Emergency Extended for Another 30 Days

By Carl D. Neff

August 5, 2020

Today, the Chief Justice of the Delaware Supreme Court issued Administrative Order No. 9, which extends Delaware’s Judicial Emergency for another 30 days, effective August 7, 2020. Per the Administrative Order, the Delaware courts will continue to operate under Phase 2. Citing the “national trend of increasing virus spread, new quarantine requirements by other states, and hotspots within [Delaware]”, the courts will not enter Phase 3 of the Reopening Plan until “medical experts believe…

Delaware Business Dispute Blog

Section 225 of the DGCL: Challenges to Director Elections, Appointments, Removals or Resignations

By Carl D. Neff

August 5, 2020

Section 225 of the Delaware General Corporation Law is an important and powerful tool for any shareholder, director or officer seeking to challenge the results of an election of directors of a Delaware corporation, along with the appointment, removal or resignation of any director or officer. From a procedural perspective, a party seeking such relief may submit a Section 225 petition to the Delaware Court of Chancery. In such an action, the Delaware Court of …

Delaware Business Dispute Blog

Delaware Court of Chancery Permits Validation of Defective Act Under Section 205 of the DGCL; Failure of Authorization Distinguished from Absence of Corporate Power

By Carl D. Neff

August 3, 2020

In a rare decision pertaining to Section 205 of the DGCL handed down today by the Delaware Court of Chancery, Applied Energetics, Inc. v. Farley, et al., C.A. No. 2018-0489-JTL (Del. Ch. Aug. 3, 2020), Vice Chancellor Laster granted summary judgment in favor of a plaintiff who challenged a defective board action, as result of failing to meet the quorum requirement under the corporation’s bylaws. However, the Court also ruled that such defective act…

Delaware Business Dispute Blog

Stockholder Seeking Books and Records Need Not Prove an End-Use for Valuation of Shares

By Carl D. Neff

August 1, 2020

It is well established that when a stockholder of a Delaware corporation makes a books and records demand under Section 220 of the DGCL, the stockholder must state a proper purpose for the requested books and records. “Valuation of a stockholder’s investment in a corporation, particularly where the corporation is privately held, has long been recognized as a proper purpose under 8 Del. C. § 220.” Thomas & Betts Corp. v. Leviton Mfg. Co.,…

Delaware Business Dispute Blog

Review of Business and Commercial Litigation in the State of Delaware and Beyond

Blog Authors

Chancery Grants Dismissal of Claims under Revlon Standard, Citing Exculpatory Provision

Petitioning the Court of Chancery to Appoint a Custodian or Receiver to a Delaware Corporation Under Section 226 of the DGCL

Delaware Judiciary Extends Emergency Until Oct. 5, 2020; Unveils Plan to Resume Trials In October

Court Denies Motion to Seal Entirety of TRO Hearing

Delaware Court of Chancery Rules that Management May Not Preclude Director From Obtaining Privileged Information

Delaware Court of Chancery Holds that Internal Affairs Doctrine Governs Books and Records Demand; Applies Delaware Law Instead of California Corporations Code

Delaware Judicial Emergency Extended for Another 30 Days

Section 225 of the DGCL: Challenges to Director Elections, Appointments, Removals or Resignations

Delaware Court of Chancery Permits Validation of Defective Act Under Section 205 of the DGCL; Failure of Authorization Distinguished from Absence of Corporate Power

Stockholder Seeking Books and Records Need Not Prove an End-Use for Valuation of Shares

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