Securities and Federal Corporate Law

Aric Wu

Court: Certificate of Incorporation Doesn't Grant Preferred Stockholders Liquidation Preference

By Aric H. Wu |

A recent Chancery Court decision illustrates that courts are reluctant to imply preferred stockholder rights that are not clearly set forth in the documents containing the preferred stock terms.

Edward M. McNally

How to Open the Door to Chancery

By Edward M. McNally |

Sometimes more is not a good idea. That is the case when a complaint alleges multiple bases to invoke the jurisdiction of the Delaware Court of Chancery, but still fails to sustain that subject matter jurisdiction.

K. Tyler O’Connell

High Court Resolves $2B 'True Up' Dispute Against Acquirer

By K. Tyler O'Connell |

A recent Delaware Supreme Court decision resolved a $2 billion post-closing dispute about the interplay between common features of acquisition agreements.

Brett McCartney

Chancery Holds That Deal Price Is Fair Value in Massive Appraisal Fight

By Brett M. McCartney |

In In re Appraisal of PetSmart, one of Delaware's largest appraisal litigations in history, the Delaware Court of Chancery held that the deal price in PetSmart Inc.'s going-private transaction was the best evidence of fair value.

Mezzanine Debt Versus Preferred Equity

By David Broderick and Brian Donnelly |

Mezzanine Debt versus Preferred Equity: which investment structure is utilized by the subordinate capital provider is often determined by the regulatory and other circumstances and objectives of the senior lender and not the preferences of the subordinate capital provider.

Albert Manwaring of Morris James

Structural Coercion in Stockholder Vote to OK Transaction Negated Cleansing Effect Under 'Corwin'

By Albert H. Manwaring IV |

Under a Delaware Supreme Court's decision, business judgment review applies to cleanse a fiduciary challenge to a noncontrol transaction that was approved by an uncoerced, fully informed, disinterested stockholder vote.

Adam H. Offenhartz, Jefferson E. Bell and Anna Karamigios

When Do Derivative Claims "Survive" Mergers—'Massey II' Adds Clarity

By Adam H. Offenhartz, Jefferson E. Bell and Mark H. Mixon Jr. |

M&A practitioners are regularly faced with the question of whether derivative claims will survive a merger after which the plaintiff will no longer be a stockholder.

Barry M. Klayman and Mark E. Felger

Court Lacks Personal Jurisdiction Over Nonresident Blogger, Website Host

By Barry M. Klayman and Mark E. Felger |

The Delaware Superior Court has ruled on an issue over an allegedly defamatory article that caused injury to a Delaware corporation hosted on a website outside of Delaware.

Rupert M. Barkoff

Franchisees Sitting on My Board? Never!

By Rupert M. Barkoff |

Franchising columnist Rupert M. Barkoff writes: There are many situations today where a group or a constituency wants to make sure that it has a voice at the decision-making table by having a representative on its franchisor's board of directors—a so-called "constituency director." Is this a good or bad idea?

Lewis H. Lazarus

Court of Chancery Dismisses Post-Closing Challenge to Merger Transaction

By Lewis H. Lazarus |

Stockholders who believe that a board breached its fiduciary duties in connection with information provided to stockholders asked to vote for a merger transaction can either seek to enjoin the transaction or seek damages post-closing.

Ryan C. Cicoski and Jesse L. Noa

Recent Order Highlights Push for Trial Experience for New Attorneys

By Ryan C. Cicoski and Jesse L. Noa |

A 2017 standing order from U.S. Magistrate Judge Christopher Burke of the District of Delaware is part of an uptick in federal judges encouraging the participation of newer attorneys at trial.

Patricia A. Winston and Edward McNally, of Morris James

Where Is Delaware Corporate Litigation Going?

By Edward M. McNally and Patricia A. Winston |

There are always risks involved in buying a company. Until you are actually inside a company's operations, you can never be sure you know everything about it.

Jennifer H. Rearden, Jefferson E. Bell and Michael Marron

Del. Supreme Court Clarifies, Applies Choice of Law to Multistate Disputes

By Jennifer H. Rearden, Jefferson E. Bell and Michael Marron |

In a recent decision, the Delaware Supreme Court considered the "fundamental question" of whether "Delaware courts are required to treat insurance contracts that are part of a broad insurance program as legal documents with meaning that varies substantially based on where each claim happens to arise."

What to Consider When a US Public Company Acquires a Non-US Company

By By Jennifer V. Audeh and Corey R. Brown |

When it's time to sell a company, there are many financial and legal steps a target should consider regarding a merger or acquisition

Clockwise, starting from top, Christopher B. Chuff, Joanna J. Cline, Douglass D. Herrmann, and James H.S. Levine

Boards Should Consider Adopting 'Director-Specific' Limits in Compensation Plans

By Christopher B. Chuff, Joanna J. Cline, Douglass D. Herrmann and James H.S. Levine |

A recent decision by the Delaware Court of Chancery serves as a reminder that boards of directors of Delaware corporations should consider amending their company's director compensation plans to include specific limits on the amount of compensation that a director may be awarded in a given year.

Brett McCartney

Stockholders' Complaint Survives Chancery's 'Corwin' Analysis

By Brett M. McCartney |

After a series of successful applications of the Corwin doctrine in Delaware's Court of Chancery, a plaintiff has finally survived a motion to dismiss where Corwin was applied.

Albert Manwaring of Morris James

Stockholder Vote Enjoined Over Banker's Financial Interest in Merger

By Albert H. Manwaring IV |

Investment bankers play a central role in the exploration, evaluation, selection and implementation of strategic alternatives for Delaware companies.

Francis G.X. Pileggi

Removal of Director, Members of Nonstock Corporation Invalid

By Francis G.X. Pileggi, Justin M. Forcier and Alexandra Rogin |

The Delaware Court of Chancery recently held that a pro se defendant was not effectively removed as a director, officer or member of a Delaware nonstock corporation, Rainbow Mountain Inc.

Lewis H. Lazarus

Court Gives Great Weight to Pre-Merger Negotiations

By Lewis H. Lazarus |

Contract interpretation is a staple of litigation in the Delaware Court of Chancery. Disputes over the meaning of commercial contracts, foundational documents such as certificates of incorporation or bylaws or agreements governing alternative entities such as limited liability companies or limited partnerships require the court to interpret language in contracts. So too do merger, stock purchase or sale of asset agreements. With the expansion of jurisdiction under Section 111(a)(2) of the Delaware General Corporation Law (DGCL) in 2016, disputes over the interpretation of agreements arising out of stock purchase and asset sale agreements may be expected to increase the number of cases requiring the court to interpret parties' agreements. The recent case of Shareholder Representative Services v. Gilead Sciences, C. A. No. 10537-CB (March 15), illustrates the methodology the court uses to interpret a contract and provides a primer for litigants seeking guidance on how the Court of Chancery resolves contract disputes.

Barry M. Klayman and Mark E. Felger

Delaware's Anti-SLAPP Statute Limited to Land Use Disputes

By Barry M. Klayman and Mark E. Felger |

In a rare case involving resort to a Delaware statute's legislative history, Vice Chancellor J. Travis Laster held that Delaware's anti-SLAPP statute is to be construed narrowly so as to be applicable only to public petition and participation in land use proceedings, and is not a broad legal protection against defamation claims.

P. Clarkson Collins Jr.

Del. Justices Award Attorney Fees Under Promissory Note Fee-Shifting Provisions

By P. Clarkson Collins Jr. |

Persuaded by the arguments of the appellant noteholders, the Delaware Supreme Court ruled that two fee-shifting provisions in the promissory notes entitled them to recover attorney fees the noteholders incurred filing suit to secure warrants issuable under the notes.

Patricia A. Winston and Edward McNally, of Morris James

The Perils of Advancement

By Edward M. McNally and Patricia A. Winston |

There is perhaps one single obligation that most aggravates corporate boards of directors: Paying your opponent's legal fees when you are convinced he has done you wrong. How then is that not just possible, but a regular occurrence?

James L. Hallowell and Lauren M. Sager

Justice Holland's Lasting Imprint on Corporate Law

By James L. Hallowell and Lauren M. Sager |

In early February, Justice Randy Holland, the longest-tenured member of the Delaware Supreme Court, announced his plans to retire at the end of March.

Brian Arbetter and Samantha Beltre

Employer Tips for Minimizing Risks of Independent Contractors

By Brian Arbetter and Samantha Beltre |

In today's varying economic climate, many employers are using and misusing the concept of independent contractor to engage individuals to perform services.

Stephen Plotnick and Alexander Malyshev.

New York's LLC Law Fosters Greater Certainty for Members and Their Rights

By Stephen M. Plotnick and Alexander G. Malyshev |

The LLC form is often favored because it offers a great deal of flexibility in how a business is to be governed and operated day-to-day.

Brett McCartney

Chancery Appoints Custodian to Dislodge Board Deadlock

By Brett M. McCartney |

Delaware law entrusts the management of a corporation to its board of directors. Not surprisingly, circumstances arise where a consensus among directors cannot be reached on major decisions impacting a company.

Joseph M. McLaughlin and Yafit Cohn

Director Independence to Consider Pre-Suit Demand

By Joseph M. McLaughlin and Yafit Cohn |

A recent Delaware decision again signals those courts will closely scrutinize personal and business relationships that are asserted as compromising a director's ability to consider a pre-suit demand impartially.

Nathaniel J. Stuhlmiller

Applying 'Corwin' to Mergers and Irrebutable Presumption of Business Judgment Rule

By Nathaniel J. Stuhlmiller |

In Corwin v. KKR Financial Holdings,, the Delaware Supreme Court held that the business judgment rule applies to any merger not subject to entire fairness review that has been approved by a fully informed, uncoerced vote of disinterested stockholders.

Albert Manwaring of Morris James

Stockholder Merger Vote Sets High Bar for Post-Closing Claims

By Albert H. Manwaring IV |

A Delaware Supreme Court decision reaffirmed the power of fully-informed, uncoerced, disinterested stockholder approval to immunize M&A transactions against stockholder challenge.

Gabrielle Levin

Effect of Director Relationships on Director Independence

By Gabrielle Levin |

A recent decision from the Delaware Supreme Court ihighlights the potential impact that directors' business and financial arrangements can have on their independence in the context of considering shareholder demands on the board.

James H.S. Levine, Joanna J. Cline, Douglas D. Herrmann and Christopher B. Chuff

Limited Application Fee-Shifting Bylaw Violates DGCL

By James H.S. Levine, Joanna J. Cline, Douglas D. Herrmann and Christopher B. Chuff |

In a legislative response to a Delaware Supreme Court ruling, a new statute limiting the effect of fee-shifting bylaws became effective on Aug. 1, 2015.

Barry M. Klayman and Mark E. Felger

Directors Are Public Figures for Election-Related Communications Among Investors

By Barry M. Klayman and Mark E. Felger |

In a case of first impression in Delaware, Vice Chancellor J. Travis Laster held that directors of a corporation, plaintiffs in a defamation action, were public figures for the limited purpose of election-related communications among the company's investors.

Lewis H. Lazarus

Court Dismisses Derivative Action in Stockholder's Litigation Demand

By Lewis H. Lazarus |

The Delaware courts have been critical of litigants who bring derivative claims without first seeking books and records.

Gary J. Mennitt and Debra D. O'Gorman

Bondholder Litigation: Covenant-Light Indentures and Affiliate Transactions

By Gary J. Mennitt and Debra D. O'Gorman |

In a closely watched case of particular importance to bond lawyers, the Delaware Supreme Court has recently provided guidance on questions that often arise in bondholders' rights cases.