Justia Delaware Court of Chancery Opinion SummariesArticles Posted in Bankruptcy
Spring Real Estate, LLC v. Echo/RT Holdings, LLC
RayTrans Holdings, Inc., through the Chapter 7 Trustee for the bankruptcy estate of RayTrans Holdings, cross-claimed against RayTrans Distribution Services, Inc., Echo Global Logistics, Inc., and Echo/RT Holdings, LLC (collectively, Defendants) seeking avoidance of certain transfers among Defendants, an accounting, and injunction prohibiting any further transfers of RayTrans assets by Defendants until all creditors of RayTrans Holdings were paid in full. The Court of Chancery granted Defendants’ motion to dismiss the cross-claims, holding (1) the Trustee does not have standing to sue for fraudulent transfer on behalf of RayTrans Distribution; (2) RayTrans Distribution’s transfer of assets was not fraudulent; and (3) the Trustee’s request for leave to amend the cross-claims is denied. View "Spring Real Estate, LLC v. Echo/RT Holdings, LLC" on Justia Law
Vichi v. Koninklijke Philips Elecs., N.V.
This case concerned a dispute between a Netherlands holding company and an Italian businessman. The businessman made a loan to the holding company for a joint venture. The joint venture eventually went into bankruptcy and defaulted on its loan obligations, including the loan from the businessman. The businessman filed this action alleging, among other things, that the holding company induced him to make the loan by representing that it would support and continue to back the joint venture. The holding company denied making those representations or having any obligations to the businessman. The holding company moved for summary judgment on multiple grounds. The Court of Chancery (1) found the businessman's claims were not barred for lack of standing; (2) denied summary judgment on the ground of laches; (3) denied summary judgment on the holding company's English statute of frauds defense; (4) granted summary judgment in the holding company's favor on the businessman's Italian law claim for breach of implied or oral contract and his Dutch law claim; and (5) granted the holding company's motion for summary judgment regarding the businessman's claim for unjust enrichment. View "Vichi v. Koninklijke Philips Elecs., N.V." on Justia Law
In re BankAtlantic Bancorp, Inc. Litigation
This case involved Bancorp's agreement to sell BankAtlantic to BB&T. Plaintiffs, institutional trustees, sued to enforce debt covenants that prohibited Bancorp from selling "all or substantially all" of its assets unless the acquirer assumed the debt. The evidence at trial established that Bancorp was selling substantially all of its assets, and BB&T had not agreed to assume the debt. The ensuing event of default would result in the debt accelerating. Bancorp could not pay the accelerated debt. Because this eventuality would inflict irreparable harm on plaintiffs, the court entered contemporaneously an order permanently enjoining Bancorp from consummating the sale. View "In re BankAtlantic Bancorp, Inc. Litigation" on Justia Law
Posted in: Bankruptcy, Business Law, Corporate Compliance, Delaware Court of Chancery, Mergers & Acquisitions
Encite, LLC v. Soni, et al.
This case involved a claim for breach of the fiduciary duty of loyalty that stemmed from a dispute regarding assets of IFCT, a now defunct tech startup company founded by Stephen Marsh to develop potentially revolutionary micro fuel cell technology. The crux of plaintiff's argument was that the Director Defendants conducted an unfair and disloyal bidding process, whereby they favored the Echelon-backed bid and refused to follow up on or negotiate with other superior bids. As a result, IFCT missed its chance to sell its assets at the peak of their value and was forced to sell its assets at a discount in bankruptcy. Given that the Director Defendants have conceded the applicability of entire fairness review and given the fact-intensive nature of that review, the court found that the Director Defendants have not met their burden at this stage to achieve summary judgment against Encite. The court also found that material facts remained as to the liability of Echelon for aiding and abetting the alleged breach of fiduciary duty by the Director Defendants and therefore, the court denied Echelon's motion for summary judgment on that claim. The court finally found that material facts also remained regarding Echelon's third party claims, and so denied Marsh's motion for summary judgment. View "Encite, LLC v. Soni, et al." on Justia Law
Posted in: Bankruptcy, Business Law, Corporate Compliance, Delaware Court of Chancery, Intellectual Property, Professional Malpractice & Ethics
Roseton Ol, LLC, et al. v. Dynegy Holdings Inc.
This case arose out of a sale-leaseback transaction that occurred in 2001. On July 10, 2011, the seller-lessees' parent company announced plans for a proposed transaction whereby it would seek a new credit facility and undergo an internal reorganization. As part of a subsequent reorganization, substantially all of its profitable power generating facilities would be transferred from existing subsidiaries to new "bankruptcy remote" subsidiaries, except for two financially weakened power plants. On July, 22, 2011, plaintiffs brought this action seeking to temporarily restrain the closing of the proposed transaction on the grounds that it violated the successor obligor provisions of the guaranties and would constitute a fraudulent transfer. The court found it more appropriate to analyze plaintiffs' motion for a temporary restraining order under the heightened standard for a preliminary injunction. Having considered the record, the court held that plaintiffs have failed to show either a probability of success on the merits of their breach of contract and fraudulent transfer claims or the existence of imminent irreparable harm if the transaction was not enjoined. Therefore, the court denied plaintiffs' application for injunctive relief. View "Roseton Ol, LLC, et al. v. Dynegy Holdings Inc." on Justia Law
Posted in: Bankruptcy, Business Law, Contracts, Corporate Compliance, Delaware Court of Chancery, Energy, Oil & Gas Law, Mergers & Acquisitions