Topic: Extinguished by Merger

Cabo Verde Capital’s Merger Into A Foreign Company Severed Stockholder’s Standing To Bring A Books And Records Action In Delaware Chancery Court

By Holly Hatfield and Max E. Kaplan

By letter report dated June 8, 2017, Master of Chancery Morgan T. Zurn recommended dismissal of the complaint in Walker v. Cabo Verde Capital, Inc., C.A. No. 11696-MZ (Del. Ch. June 8, 2017), finding that the plaintiff lacked standing to compel inspection of a non-extant Delaware company’s books and records.  Citing recent developments in Delaware law, the Court held that the plaintiff could not satisfy the “stockholder” prerequisite for filing a Section 220 action because all stockholder interest had been previously extinguished by the company’s merger into a foreign corporation.

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Cut Off from Books and Records: Vice Chancellor Holds Termination of Ownership Rights by Merger Extinguishes Stockholder Standing to Bring Section 220 Action

Weingarten v. Monster Worldwide, Inc., C.A. No. 12931-VCG (Del. Ch. Feb. 27, 2017)

By Joanna Diakos Kordalis and Max E. Kaplan

By memorandum-opinion dated February 27, 2017, Vice Chancellor Glasscock dismissed plaintiff’s Verified Complaint to Compel Inspection of Books and Records in Weingarten v. Monster Worldwide, Inc. after finding plaintiff lacked standing to bring such a claim.  Specifically, the Court held that, under Section 220 of the Delaware General Corporation Law, only a current stockholder may bring an action to redress the denial of access to a corporation’s books and records, even if the plaintiff had been a stockholder when initially demanding access.

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Directors Trigger Entire Fairness Review by Approving Merger to Extinguish Potential Liability for Derivative Claims

By  Lisa Stark and Claire White

In In Re Riverstone National, Inc. Stockholder Litigation, C.A. No. 9796-VCG (July 28, 2016), the Delaware Court of Chancery held that  a board’s approval of a merger agreement containing a release of claims against the directors and entered into while a potential derivative suit for usurpation of corporate opportunity was threatened against such directors warranted entire fairness review.

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