Author: hardesty

Court of Chancery Judicially Validates Company’s Ratification of Defective Corporate Acts, Therefore Rejecting Bid to Unwind Merger

By Holly Hatfield and B. Ashby Hardesty, Jr.

In Charles Almond, et al. v. Glenhill Advisors LLC, et al., C.A. No. 10477-CB, Chancellor Bouchard ruled in favor of the defendants, directors of furniture company Design Within Reach Inc. (the “Company”) and Glenhill Capital Management LP (“Glenhill”), on all of the plaintiff-investors’ claims relating to the 2014 acquisition of DWR by Herman Miller, Inc. (“Herman Miller”). In doing so, Chancellor Bouchard judicially validated certain measures taken by Herman Miller to rectify an error that had diluted its ownership stake in the Company. Chancellor Bouchard also dismissed claims challenging transactions through which the Company’s board members received additional equity in the Company before the merger, holding that because these claims were derivative in nature, the plaintiffs’ standing to bring such claims were extinguished because of the merger.

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Court of Chancery Clarifies Method of Determining Specific Advancements

By Scott Waxman, Hilda Li, and B. Ashby Hardesty, Jr.

In this case, Vice Chancellor Laster issued a memorandum opinion in Edward M. Weil, et al v. Vereit Operating Partnership, L.P., C.A. No. 2017-0613-JTL, granting partial summary judgment in favor of individual plaintiffs, who served as senior officers and members of the board of directors of Vereit, Inc, (“Vereit”) the sole general partner of Vereit Operating Partnership, L.P. (the “Partnership”). Read More

In an Appraisal Action, Chancery Court Uses Its “Significant Discretion” to Determine that Stock Sold Was Undervalued by Approximately 7%

By Christopher Tillson and B. Ashby Hardesty, Jr.

On July 8, 2016, Chancellor Bouchard issued a memorandum opinion in In re Appraisal of DFC Global Corp., C.A. No. 10107-CB (Del. Ch. July 8, 2016), finding that shares held by former stockholders of DFC Global Corporation (“DFC”) sold to Lone Star Fund VIII (U.S.), L.P. (“Lone Star”), a private equity buyer, for $9.50 per share were undervalued. Chancellor Bouchard determined this through an examination of multiple valuation methods — comparable company and transaction analyses, discounted cash flow analyses, and the transaction price — and ultimately concluded that an equal blend of the three was the most reliable determinate of the shares’ fair value. In doing so, Chancellor Bouchard calculated that the fair market value of the DFC shares was $10.21 per share.

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Chancery Court Finds that Its Broad Authority to Validate Defective Corporate Acts Could Conceivably Compel a Corporation to Sell $5 Million of Stock Without Board Authorization or a Written Agreement

By Shoshannah Katz and B. Ashby Hardesty, Jr.

Citing the Chancery Court’s broad discretionary authority to validate defective corporate acts, Vice Chancellor Noble denied a defendant corporation’s motion to dismiss, ruling that it was “reasonably conceivable” that a plaintiff hedge fund could successfully compel the corporation to sell to it approximately $5 million worth of stock, despite the board of directors’ failure to authorize the transaction or to memorialize it in writing.

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