In Swomley v. Schlecht, C.A. No. 9355-VCL (Del. Ch. March 12, 2015), the Delaware Court of Chancery recently issued a letter opinion detailing the obligations of parties in class or derivative litigation to provide notice where a mootness fee is paid, and provided further guidance regarding the procedures that must be observed in such a scenario.
Swomley involved a transaction where former minority stockholders were frozen out following a merger between the company and a newly formed entity created by management. Prior to the merger, the plaintiff minority stockholders filed a class action complaint and sought a temporary restraining order preventing the defendants from proceeding with a vote on the merger due to the defendants’ alleged failure to disclose material facts. The defendants subsequently agreed to postpone the vote and ultimately issued supplemental disclosures.
