Bankruptcy

Delaware Chancery Court: Automatic Stay Does Not Apply To Order Compelling Shareholder Meeting

By Scott Riddle

The Delaware Corporate and Commercial Litigation Blog discusses the case of Fogel v. U.S. Energy Systems, Inc., 2008 WL 151857 (Del. Ch., Jan. 15, 2007) -

The Chancery Court cited to a decision of the U.S. Court of Appeals for the Second Circuit--which in turn relied on a Delaware Supreme Court decision, that asserted the "well-settled rule that the right to compel a shareholders' meeting for the purpose of electing a new board subsists during reorganization proceedings." Moreover, the Chancery Court relied on a U.S. Supreme Court decision for the principle that: "a corporation in Chapter 11 reorganization continues to owe duties to its shareholders and that 'the passage into bankruptcy does not sound the death knell for the shareholders' role in corporate governance.'"

You can download a copy of the decision from the Delaware Litigation Blog.

For a case where Judge Mullins in the Northern District of Georgia refused to compel a shareholders meeting until the debtor company complied with SEC regulations, see this post about the case of In re Allied Holdings, Inc, et al., Case No. 05-12525, 2007 Bankr. LEXIS 1598 (Bankr. N.D. Ga. April 20, 2007)(Mullins)

Full post as published by Georgia Bankruptcy Blog on January 22, 2008 (boomark / email).