This Article argues that, in some ways, the critics are correct: Delaware law is on a path toward politicization. But it is not because of any particular bias of its judges or its law; to the contrary, the pressures
Proxy Exempt Solicitations, again
They find that a variety of institutional investors make these filings, including public pension funds (38%), union funds (26%), and other institutions, including hedge funds (22%).
Some cases have a certain aesthetic perfection
Sometimes you come across a case so clean, so pure, with respect to first principles, it’s actually quite charming. So it is with Caribbean Sun Airlines v. Halevi International, decided this week by the Delaware Supreme Court.
Alan Boyer was hired as a financial advisor to Caribbean Sun Airlines and a related entity, and in that capacity, was given a significant amount of access to the premises. At some point, he offered to buy the whole company, and as part of the transaction, sought a loan from Halevi, to be taken out in Caribbean’s name. Except when he approached Halevi, he represented that he was president of the company and a significant shareholder. He forged some documents to that effect, though the paperwork he provided to Halevi contained significant inconsistencies. As part of the due diligence process, one of Halevi’s representatives accompanied Boyer for a site visit, where Boyer was treated respectfully by the employees and permitted to access the computers, but he refused to take the representative to see the airplanes.
Boyer then signed a loan agreement on behalf of Caribbean Sun, including a confession-of-judgment affidavit. Halevi wired the company about $4 million.
Meanwhile, the principals of
Bump up
This Bloomberg article about insurance disputes over “bump ups” caught my attention, so it’s another moment for me to step outside my (corporate) lane and pretend I know something about contracts (or insurance).
The issue is, lots of corporate managers have D&O coverage, and that coverage includes standard exclusions. Like, D&O insurance won’t cover willful acts of misconduct, that kind of thing, but it will cover settlement of such claims.
And it also includes an exclusion for “bump up” claims. That kind of claim is when the company sells itself to an acquirer, and the former shareholders sue alleging the consideration was inadequate. If there’s a settlement – or I guess an adjudication that doesn’t fall into the willful category – for bumping up the consideration paid to shareholders in an acquisition, the insurer is not obligated to cover it.
That’s led to a lot of litigation over what kinds of settlements/claims are excluded, and what are not, and insurers come out on the short end of the stick. For example, in Harman Int’l Indus. Inc. v. Ill. Nat’l Ins. Co., a Delaware Superior court held that Section 14 claims for a false proxy statement issued in connection
What’s going on with Elon Musk?
PLEASE TAKE NOTICE that Defendants-Below/Appellants Elon Musk, Robyn M. Denholm, Antonio J. Gracias, James Murdoch, Linda Johnson Rice, Brad W. Buss, and Ira Ehrenpreis, hereby appeal to the Supreme Court of the State of Delaware from (i) the December 13, 2024 Order and Final Judgment entered by the Honorable Kathaleen St. J. McCormick (the “Judgment”), (ii) the December 2, 2024 Opinion Awarding Attorney’s Fees and Denying Motion to Revise the Post-Trial Opinion (the “Ratification Opinion”), (iii) the January 30, 2024 Post-Trial Opinion (the “Post-Trial Opinion”), (iv) the
Bits and Bobs
Thing One: SEC Commissioner Mark Uyeda recently posted this dissent regarding an SEC enforcement action against Cantor Fitzgerald. The action accused Cantor Fitzgerald of taking SPACs public while already having begun to have substantive negotiations with potential merger targets. Commissioner Uyeda argues that in the context of SPACs – which are designed to merge with someone eventually – preliminary negotiations with targets should not be considered material until they are close to reaching binding contract.
John Jenkins at Deal Lawyers Blog points out Uyeda’s views may be more representative of what we can expect from the incoming administration. And I particularly note as much because (as Uyeda mentions) the SEC settled an enforcement action against Digital World Acquisition Corp. for failing to disclose discussions with Trump Media before the DWAC IPO.
Notably, the case against Patrick Orlando, the former DWAC CEO, was filed last year and continues to be litigated.
Thing Two: I was fascinated by this Bloomberg story about ATIC, the main insurance company for taxis/rideshares in New York, which recently was declared insolvent. (Anyone who teaches Walkovsky v. Carlton can’t help but be interested in NYC taxi insurance regulation.)
Anyway, the main takeaway
Forum Selection Bylaws are Just Like Contracts Now
Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee or stockholder of the Corporation to the Corporation or the Corporation’s stockholders … shall be the Court of Chancery of the State
Costco
The proponent professes concern about
Best Efforts
Second, Kroger assumed a
Fifth Circuit Strikes the NASDAQ Diversity Rule
We (B) explain that an exchange rule is not related to the purposes of the Exchange Act simply because it is a disclosure rule. The Act exists primarily to protect investors and the macroeconomy from speculative,