Litigation

Chancery Upholds Merger Netting Zero to Common Shareholders

By Francis G. X. Pileggi, Esq.

Hokanson v. Petty, 2008 Del Ch. LEXIS 182 (Dec. 10, 2008). This  Chancery Court decision could have dismissed claims on a statute of  limitations basis  alone, but also addressed the merits. One notable aspect of the court's analysis was the it upheld a decision of a board with a majority of independent members that followed a contractually mandated formula for the sale of the company. The plaintiff complained that the net proceeds did not provide any money to common shareholders (as compared to preferred shareholders). However, for several reasons that the court explained in detail, the unhappy fact of "nothing be left for common shareholders" did not provide a sufficient basis for a claim against the directors, especially in light of a provision in the charter pursuant to Section 102(b)(7).

Full post as published by Delaware Corporate and Commercial Litigation Blog on January 08, 2009 (boomark / email).