June 2021 – Delaware Docket

Produce those documents; Conflict allegations sufficient to merit inspection of books and records under Section 220 of the DGCL.

Jun 26 2021

By: Joanna A. Diakos and Kara Maynard Guio

In Alexandria Venture Inv. LLC et al. v. Verseau Therapeutics, Inc., C.A. No. 2020-0593-PAF (Del. Ch. Dec. 18, 2020), the Delaware Court of Chancery (the “Court”) granted plaintiff stockholder’s motion seeking to compel inspection of certain books and records of Verseau Therapeutics pursuant to Section 220 of the Delaware General Corporation Law (“DGCL”). The Court ruled that the stockholders met the low threshold necessary to establish a credible basis for believing that corporate wrongdoing had occurred. While disagreements with management decisions are insufficient to meet this burden, evidence of a conflict of interest in making management decisions is sufficient.

NOT RIGHT NOW: DELAWARE COURT OF CHANCERY DISMISSES SECTION 220(C) COMPLAINT TO COMPEL INSPECTION OF CORPORATION’S BOOKS

Jun 03 2021

By: David Forney and Harsha Garikapati

In MaD Investors GRMD, LLC and MaD Investors GRPA, LLC, v. GR Companies, Inc., C.A. No. 2020-0589-MTZ (Del. Ch. October 28, 2020), the Delaware Court of Chancery (the “Court”) held on an issue of first impression that a Delaware corporation has until midnight on the fifth business day after being served with a Section 220 demand to inspect books and records (a “Demand”) to respond to that Demand.

MaD Investors GRMD, LLC and MaD Investors GRPA, LLC (collectively, the “Plaintiffs”) are stockholders of GR Companies, Inc. (the “Company” or “Defendant”). In July 2020, Plaintiffs sent a Demand to compel inspection of the Company’s books and records. A week later, Plaintiffs filed a Verified Complaint against Defendant (the “Complaint”) with the Court, asking it to compel Defendant to open its books and records for inspection by Plaintiffs. In early August, the Company filed a motion to dismiss (the “Motion to Dismiss”) asserting Plaintiffs failed to comply with the 8 Del. C. § 220 requirement to wait a full five business days after the Company’s receipt of the demand to file suit.

Chancery Court Declines to Expand Gentile Doctrine

Jun 03 2021

By: Scott Waxman and Doug Logan

In Dr. Thomas Markusic et al. v. Michael Blum et al. memorandum opinion 200818, the Delaware Chancery Court (the “Court”) declined to extend the Gentile doctrine. In so doing, the Court held that the counterclaims attempting to rely on it had to be dismissed.

Firefly Space Systems, Inc. (“Original Firefly”) was an aerospace startup founded by Michael Blum, Patrick Joseph King, and Thomas Markusic in late 2013 with the aim of launching small-load rockets into orbit. Counterclaim-Plaintiffs Blum, King, Lauren McCollum, Steven Begleiter, Green Desert N.V., Swing Investments BVBA, Bright Success Capital Ltd., and Wunderkind Space Ltd. (collectively, “Original Firefly Investors”) each owned stock in Original Firefly, with Markusic in the role of CEO and sole board member of Original Firefly at all relevant times.

Archive:June 2021