Archive: May 11, 2017

Chancery Court Permits Limited Partners’ Claims Against General Partners to Proceed Despite Ongoing Bankruptcy of the Partnership

By: Scott Waxman and David Noll

On a motion to “’confirm the trial schedule,’” Vice Chancellor Glasscock determined that actions brought by the limited partners of a partnership based upon the general partner’s alleged fraud, self interest and breach of the partnership agreement were direct claims and therefore not subject to a stay pursuant to the partnership’s bankruptcy proceeding. Sehoy Energy LP et al. v. Haven Real Estate Group, LLC et al., C.A. No. 12387-VCG (Del. Ch. April 17, 2017), addressed a situation in which  the general partner of a limited partnership (and the person controlling the general partner) used funds of the limited partnership to make investments into the business of a personal friend  which ultimately resulted in the bankruptcy of the partnership.

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Chancery Court Holds Corwin Prevents Claims Where Deal Protection Measures Are Reasonable

By: Joanna Diakos and Douglas A. Logan

In In re Paramount Gold and Silver Corp. Stockholders Litigation, Consol. C.A. No. 10499-CB (Del. Ch. Apr. 13, 2017), the Delaware Chancery Court dismissed a stockholder derivative suit asserting a claim for breach of fiduciary duty against the directors (“Defendants”) of Paramount Gold and Silver Corporation (“Paramount” or the “Company”) in connection with Paramount’s merger with Coeur Mining, Inc. (“Coeur”). The Court dismissed the claim finding that a side royalty agreement entered into by Paramount and Coeur did not constitute a deal protection device and because the Court found that Plaintiffs had failed to identify any material deficiencies in Paramount’s registration statement.

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