Justia Delaware Court of Chancery Opinion Summaries

The Court of Chancery found for Plaintiff on all counts and counterclaim counts in this case involving affordable rental housing property held by a limited partnership, holding that the new limited partner lacked caused to remove the general partner.At issue was affordable housing projects in a federal program that were held by a Delaware limited partnership. Plaintiffs were the partnership and general partner and Defendant was a new limited partner. Defendant sought either a sale of the property or a buyout of its partnership interests, and when the general partner refused to cooperate, the limited partner attempted to remove the general partner for cause. The general partner sought a declaratory judgment that its removal was invalid, and the limited partner asserted counterclaims for, inter alia, breach of contract. The Court of Chancery found in favor of Plaintiffs on all counts, holding (1) the limited partner failed to prove that the general partner breached its modified judiciary duties or the limited partnership agreement; and (2) therefore, the limited partner lacked cause to remove the general partner. View "JER Hudson GP XXI LLC v. DLE Investors, LP" on Justia Law

In this case involving the receivership that Scottish Re (U.S.), Inc. (the Company) was placed under the Court of Chancery held that, when seeking court approval for the Company's rehabilitation plan, the Insurance Commissioner of the State of Delaware will not need to demonstrate that the rehabilitation plan meets the "Liquidation Standard" discussed in this opinion.The Commissioner proposed a rehabilitation plan, but the parties could not agree on the standard that the court would apply when determining whether to approve the rehabilitation plan. Specifically at issue was whether the Commissioner would have to prove that he validly determined that the rehabilitation plan treated each claimant at least as well as the claimant would fare in a liquidation of the Company, a component known as the Liquidation Standard and whether the court should require compliance with the Liquidation Standard as a matter of common law. The Court of Chancery held (1) the statutory scheme does not require compliance with the Liquidation Standard; and (2) common law does not require compliance with the Liquidation Standard. View "In re Rehabilitation of Scottish RE (U.S.), Inc." on Justia Law

This decision held that an irrevocable proxy did not run with majority shares and that a transfer restriction applied to any sale to an affiliate but not to a sale to a third party.A Delaware limited partnership (Partnership) dissolved in 2021. At issue was the seventy-five percent shares (Majority Shares) that the Partnership owned of the issued and outstanding equity of a corporation. More than two decades ago, the previous owner of the Majority Shares executed an irrevocable proxy granting three individuals the authority to vote the Majority Shares (the Irrevocable Proxy), and when the Partnership acquired the Majority Shares, it bound itself to the Irrevocable Proxy. Plaintiff sought a declaratory judgment that the Irrevocable Proxy, from which Defendants benefitted, did not run with the Majority Shares and that the Partnership can sell the shares clear of the Irrevocable Proxy. The Court of Chancery held (1) the Irrevocable Proxy did not run with the Majority Shares; (2) a transfer restriction in the addendum to the Irrevocable Party applied to any sale to an affiliate, but not to a sale to a third party; and (3) any judicial declaration at this stage would constitute an advisory opinion. View "Hawkins v. Daniel" on Justia Law

The Court of Chancery denied the petition filed by Synergy management Group LLC seeking to have its president appointed as a custodian for Forum Mobile, Inc., a defunct Delaware corporation, holding that Synergy was not entitled to the petition.Synergy sought to revive Forum as a blank check company and, through a reverse merger, begin a new business that could access the public markets. In its petition, Synergy relied on section 226(a)(3) of the Delaware General Corporation Law providing that the Court of Chancery may, upon the application of any stockholder, appoint a custodian for a corporation when the corporation has abandoned its business and failed to take timely steps to dissolve, liquidate, or distribute its assets. The Court of Chancery denied the petition, holding that section 226(b) does not contemplate that a custodian appointed under section 226(a)(3) could revivify the corporation. View "In re Forum Mobile, Inc." on Justia Law

The Court of Chancery granted in part an anti-suit injunction sought by a buyer and a parent corporation with whom the buyer contracted to acquire a wholly owned subsidiary (the Company) to bar the seller and its subsidiary from pursuing their claims in a Texas lawsuit, holding that the forum selection provision in the stock purchase agreement applied.Under the stock purchase agreement, the buyer contracted with a Company and caused the Company to enter into a supply agreement with a wholly owned subsidiary of the seller. The stock purchase agreement contained a forum selection provision. The seller signed the stock purchase agreement and did not sign the supply agreement. The seller's subsidiary signed the supply agreement but did not sign the stock purchase agreement. The seller and its subsidiary later filed a lawsuit in Texas state court seeking rescission of the supply agreement. The buyer and the Company then brought this action asking the court to apply the forum selection provision in the stock purchase agreement to the claims implicating the supply agreement. The Court of Chancery granted the request for an anti-suit injunction against the seller and against a non-signatory signatory, holding that an injunction was warranted. View "Florida Chemical Company, LLC v. Flotek Industries, Inc." on Justia Law

The Court of Chancery held that it lacked subject matter jurisdiction to dissolve or to declare the proper managers of a foreign entity.This dispute involved a company formed by two friends - a sweat equity partner and a financial partner - that was converted to a Puerto Rican limited liability company in 2018. When the financial member leveraged its majority interest to unilaterally amend the operating agreement and remove the sweat equity partner from his managerial role the sweat equity member challenged its dilution, the conversion, and the partner's removal from management. The sweat equity member further requested an order dissolving the company. The Court of Chancery held (1) the company's conversion to a Puerto Rican entity stripped the Court of Chancery of statutory jurisdiction to declare the company's present managers and to order judicial dissolution; and (2) the Court was without subject matter jurisdiction to work an equitable dissolution of a Puerto Rican entity. View "In re Coinmint, LLC" on Justia Law

The Court of Chancery granted in part and denied in part Defendants' motion to dismiss Plaintiffs' action seeking to hold Exela Technologies, Inc. and its subsidiaries liable for an appraisal judgment, holding that Plaintiffs' claim for reverse veil-piercing was viable as a matter of Delaware law.Plaintiffs, former stockholders of SourceHOV Holdings, Inc., were awarded an appraisal judgment reflecting their shares were worth in excess of what they were offered in SourceHOV Holdings' merger with Exela. The court entered a charging order against SourceHOV Holdings' interests in its subsidiaries to facilitate the payment of the judgment, but the judgment remained unsatisfied. Plaintiffs, in a parallel action, sought to hold Exela and its affiliated entities accountable for the appraisal judgment. The Court of Chancery dismissed Plaintiffs' claim for unjust enrichment for failure to state a claim but denied Defendants' motion to dismiss the reverse veil-piercing claim, holding that this equitable remedy was viable. View "Manichaean Capital, LLC v. Exela Technologies, Inc." on Justia Law

The Court of Chancery granted Defendants' motion for judgment on the pleadings in this action seeking to draw or claw back several million dollars in cash, holding that Defendants were entitled to the motion.Seller sold all outstanding shares of its wholly owned subsidiary (together, with its subsidiaries, Target) to Buyer (together with Target, Defendants). All of Target's assets, except for those excluded by the parties' purchase agreement, were transferred in the stock transaction (the disputed cash). After the transaction closed, millions of dollars in cash remained in Target's bank accounts. Seller asked Buyer to return the disputed cash but Buyer refused. Seller then brought this complaint. Defendants sought judgment on the pleadings in their favor. The Court of Chancery granted the motion, holding that no material issue of fact existed and that Defendants were entitled to judgment as a matter of law. View "Deluxe Entertainment Services Inc. v. DLX Acquisition Corp." on Justia Law

In this expedited contractual dispute, the Court of Chancery granted summary judgment in favor of defendant Ripple Labs, Inc., holding that Ripple was entitled to summary judgment.Ripple, an enterprise blockchain company, executed a stockholders' agreement with Tetragon Financial Group, Ltd., an investment company that held a majority of Ripple's Series C preferred stock, memorializing Tetragon's investment and status as "Lead Purchaser." Pursuant to the agreement Tetragon had a reception right that was triggered upon a "Securities Default," upon which Tetragon may demand redemption of its shares via a "Redemption Request." At issue was whether certain actions by the SEC constituted a "Securities Default" under the agreement. The Court of Chancery granted summary judgment for Ripple, holding that certain SEC processes satisfied the definition of "Securities Default." View "Tetragon Financial Group Limited v. Ripple Labs Inc." on Justia Law

The Court of Chancery granted Plaintiffs' motion to compel the production of documents and denied Defendants' motion for a retroactive extension in the time to respond, holding that Defendants are required to product all documents responsive to the requests for production of documents within fourteen days.Through Heartland Family Group, LLC, Alexander Burns controlled Southport Lane, L.P. and its affiliates (the Southport Entities). Plaintiffs sued Burns and Heartland, arguing that certain transactions rendered two companies acquired by the Southport Entities insolvent. Plaintiffs served requests for production of documents on Defendants. In response, Defendants invoked the Fifth Amendment. Plaintiffs then moved to compel the production of documents and responses to interrogatories. Defendants moved for a retroactive extension. The Court of Chancery granted Plaintiffs' motion to compel and denied the motion for a retroactive extension, holding that Defendants' invocation of the Self-Incrimination Clause is overruled. View "Wood v. U.S. Bank National Ass'n" on Justia Law