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
Delaware Judiciary Extends Emergency Until Oct. 5, 2020; Unveils Plan to Resume Trials In October
By Carl D. Neff on
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…
Court Denies Motion to Seal Entirety of TRO Hearing
By Carl D. Neff on
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…
Delaware Court of Chancery Rules that Management May Not Preclude Director From Obtaining Privileged Information
By Carl D. Neff on
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.…
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 on
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…
Delaware Judicial Emergency Extended for Another 30 Days
By Carl D. Neff on
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…
Section 225 of the DGCL: Challenges to Director Elections, Appointments, Removals or Resignations
By Carl D. Neff on
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…
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 on
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…
Stockholder Seeking Books and Records Need Not Prove an End-Use for Valuation of Shares
By Carl D. Neff on
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…
Chancery Denies Books and Records Demand; Déjà Vu All Over Again
By Carl D. Neff on
The recent decision of SolarReserve CSP Holdings, LLC v. Tonopah Solar Energy, LLC, C.A. No. 2020-0064-JRS (Del. Ch. July 24, 2020), handed down by the Delaware Court of Chancery, is an important read for any litigant involved in a books and records demand, where the party seeking information has assigned its interests in the…