Chancery Rules That Claims Against General Partner Are Direct, Allows Action to Proceed Despite Partnership’s Bankruptcy

By | Delaware Chancery Law Blog | April 19, 2017
Whether a claim against company management is direct or derivative is not infrequently disputed in litigation before the Delaware Court of Chancery.  This determination becomes important in many contexts, including whether it was necessary for plaintiff to make a pre-suit demand upon the board, whether derivative claims of a company have been assigned to a receiver, or whether such claims have previously been settled in a prior litigation. View Full Post
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DE Bankruptcy Court Dismisses Preference Complaint Against Former Insider in Part with Prejudice

Not uncommonly, a preference complaint fails to adequately allege that the transfers sought to be recovered by the trustee were made “for or on account of an antecedent debt owed by the debtor before such transfer was made”, as required under Section 547(b) of the Bankruptcy Code. View Full Post
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Carve-out Provision in DIP Financing Order Did Not Limit Fees to Committee Counsel

In the recent decision of In re Molycorp, Inc., 562 B.R. 67 (Bankr. D. Del. 2017), Judge Sontchi held that a carve-out provision in a DIP financing order did not act as an absolute limit on the fees and expenses payable to counsel to the creditors committee in a case with a confirmed chapter 11 plan. View Full Post
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Summary Judgment Granted in Favor of Delaware Officer Due to Release

By | Delaware Chancery Law Blog | March 27, 2017
When applicable, former D&Os of Delaware corporations will rely upon a release from the company to shield liability against class action or derivative lawsuits filed thereafter. The recent decision of Seiden v. Kaneko, C.A. No. 9861-VCS (Del. Ch. Mar. 23, 2017) is an interesting read on the effectiveness of such a release. View Full Post
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Chancery Opinion Provides a Roadmap to Discovery Rules and Obligations

By | Delaware Chancery Law Blog | March 15, 2017
In the recent decision of In re Oxbow Carbon LLC Unitholder Litig., Consol. C.A. No 12447-VCL (Del. Ch. March 13, 2017), Vice Chancellor Laster provides a comprehensive review of pretrial discovery rules before the Delaware Court of Chancery.  This opinion is an excellent roadmap for conducting discovery in Delaware, and contains a treasure-trove of citations, authorities and maxims that would aid any Chancery practitioner. View Full Post
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Cal Dive Offshore Contractors, Inc. Preference Actions Filed

On March 2, 2017, Cal Dive Offshore Contractors, Inc. (“Cal Dive” or “Debtor”) filed approximately 136 complaints seeking the avoidance and recovery of allegedly preferential and/or fraudulent transfers under Sections 547, 548 and 550 of the Bankruptcy Code. Cal Dive and its affiliated debtors filed voluntary petitions for bankruptcy in the U.S. View Full Post
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Books and Records Demand Denied for Lack of Standing

By | Delaware Chancery Law Blog | March 3, 2017
Under Section 220 of the Delaware General Corporation Law (“DGCL”), only stockholders or directors have standing to make a demand to inspect a Delaware corporation’s books and records.  What happens if, after a books and records demand is made upon the corporation, but before an action is commenced before the Court of Chancery, the stock of the demanding stockholder is extinguished through a merger?   View Full Post
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Books and Records Demand Played Role in Selection of Lead Counsel

By | Delaware Chancery Law Blog | March 1, 2017
In selecting lead counsel for a stockholder derivative litigation, the Court of Chancery applies the factors set forth under Hirt v. U.S. Timberland Service Co., 2002 WL 1558342 (Del. Ch. July 3, 2002).  These factors are as follows: the “quality of the pleading that appears best able to represent the interests of the shareholder class and derivative plaintiffs;” the relative economic stakes of the competing litigants in the outcome of the lawsuit (to be accorded “great weight”); the willingness and ability of all the contestants to litigate vigorously on behalf of an entire class of shareholders; the absence of any conflict between larger, often institutional, stockholders and smaller stockholders; the enthusiasm or vigor with which the various contestants have prosecuted the lawsuit; and [the] competence of counsel and their access to the resources necessary to prosecute the claims at issue. View Full Post
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