Archive: November 2019

Delaware Court of Chancery Holds That Third-Party Stockholder Has Standing to Enforce Anti-Takeover Protections

By Scott E. Waxman and Frank J. Mazzucco

In Arkansas Teacher Retirement System v. Alon USA Energy, Inc., et al., C.A. No. 2017-0453-KSJM (Del. Ch. Jun. 28, 2019), the Delaware Court of Chancery found that a plaintiff stockholder, in connection with a merger, had standing as a third-party beneficiary to bring claims for breach of fiduciary duty and breach of a stockholder agreement.

Read More

Former Derivative Plaintiff Lacks Standing to Pursue Direct Claims Against General Partner

By: Scott Waxman and Zack Sager

In Morris v. Spectra Energy Partners (DE) GP, LP, the Court of Chancery held that the plaintiff, who previously lost standing to maintain a derivative action after it ceased to be a unit holder of a limited partnership, also lacked standing to directly challenge the fairness of the transaction that extinguished its right to pursue the derivative action.

Read More

Delaware Court of Chancery Holds Deal Price Generated Through Reliable Sales Process Was Fair Value

By: Shoshannah D. Katz and Serena M. Hamann

In the statutory appraisal proceeding, In re Appraisal of Columbia Pipeline Group, Inc., Cons. C.A. No. 12736-VCL (Del. Ch. August 12, 2019), the Delaware Court of Chancery determined that the fair value of Columbia Pipeline Group, Inc. (“Columbia” or the “Company”) common stock at the effective date of acquisition by TransCanada Corporation (“TransCanada”) was the deal price of $25.50 per share, not the $32.47 per share price proposed by the petitioners. The petitioners argued that the Court should determine fair value using the discounted cash flow method (“DCF”), while TransCanada proposed use of the deal price minus synergies and Columbia’s unaffected trading price as valuation indicators. The Court ruled the sale process in this case was sufficiently reliable to make the deal price a persuasive indicator of fair value.

Read More

Delaware Court of Chancery Allows Derivative Claim To Proceed Regarding Allegedly “Grossly Excessive” Non-Employee Director Compensation

By Remsen Kinne and Frank J. Mazzucco

In Stein v. Blankfein et al., C.A. No. 2017-0354-SG (Del. Ch. May 31, 2019), the Delaware Court of Chancery, in considering a motion to dismiss, allowed a stockholder’s derivative claim to proceed against an entity’s non-employee directors alleging that such director compensation was grossly excessive and thus represented a breach of the fiduciary duty of loyalty.

Read More

Chancery Court Reaffirms Protection of Mandatory Advancement Rights

By: David Forney and Rich Minice

In Nielsen v. EBTH Inc., C.A. No. 2019-0164-MTZ (Del. Ch. Sep. 30, 2019), the Delaware Court of Chancery reaffirmed its standard favoring advancement of expenses to officers or directors of a company where the corporation provides mandatory advancement rights either by its certificate of incorporation (“Charter”) or separate indemnification agreements. The court granted summary judgment in favor of the plaintiffs because they (i) either used their corporate powers or such powers were necessary for the commission of the alleged misconduct in the underlying action; or (ii) the alleged misconduct in the underlying action is inextricably intertwined with the actions taken in the plaintiffs’ former capacities as officers or directors, such that the plaintiffs would necessarily be required to disprove allegations that they acted improperly as such. Advancement is appropriate when either of the two prongs for this nexus test are met.

Read More

CHANCERY COURT ALLOWS CLAIMS DUE TO MANAGER’S ALLEGIANCE TO PARTICULAR EQUITY HOLDERS OVER THE COMPANY

By: Scott E. Waxman and Douglas A. Logan

In Klein and Cambridge Therapeutic Technologies, LLC, v. Wasserman et al., C.A. No. 2017-0643-KSJM (May 29, 2019), the Delaware Court of Chancery addressed claims of breach of fiduciary duties, tortious interference, and civil conspiracy. Defendants’ motion to dismiss the claims was granted in part and denied in part.

Read More

Copyright © 2019, K&L Gates LLP. All Rights Reserved.