News & Analysis as of

Shareholders Breach of Contract

Goodwin

Life Sciences Licensing and M&A Update: Catching Up on Recent Decisions Affecting Commercially Reasonable Efforts Definitions and...

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Recently, the Delaware Chancery Court and the Third Circuit issued three significant decisions on key issues affecting licensing and M&A transactions in the life sciences industry....more

Morris James LLP

Chancery Determines Pharmaceutical Company Complied with Merger Agreement’s Requirement To Use Commercially Reasonable Efforts

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Himawan v. Cephalon, Inc., C.A. No. 2018-0075-SG (Del. Ch. Apr. 30, 2024) - Stockholder representatives of an acquired corporation brought claims alleging that defendants had failed to use contractually-required...more

Morris James LLP

Court of Chancery Dismisses Aiding And Abetting Fraud Claim Against Corporate Officers And Directors On Grounds That A Corporation...

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Urvan v. AMMO, Inc., Consol. C.A. No. 2023-0470 PRW (Del. Ch. Feb. 27, 2024, corrected Mar. 14, 2024) - It is an axiom of Delaware law that a corporation acts through its human agents. This principle informs the causes of...more

Morris James LLP

Chancery Invokes the Implied Covenant to Invalidate Shareholder Rights Plan

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Whitestone REIT Operating Partnership L.P. v. Pillarstone Capital REIT, C.A. No. 2022-0607-LWW (Del. Ch. Jan. 25, 2024) - In Delaware, the implied covenant of good faith and fair dealing is inherent in all contracts and...more

Morris James LLP

Chancery Excuses Condition in Stockholder Agreement When Company Caused its Non-Occurrence

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Chordia v. Lee, C.A. No. 2023-0382-NAC (Del. Ch. Jan. 4, 2024) - In this case, as part of a sale of a majority interest, a stockholder agreement granted the founders the ability to designate members to the board of...more

White & Case LLP

The Delaware General Assembly to the Rescue: Proposed Legislative Fixes to Uncertainty Created by Three Significant Delaware...

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Summary - On March 28, 2024 the Council of the Corporation Law Section of the Delaware State Bar Association released a set of proposed amendments to the Delaware General Corporation Law (the "DGCL"). The proposed...more

Morris James LLP

Chancery Decision Explains Availability of Reformation as a Targeted Remedy

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AECOM, et al. v. SCCI Nat’l Hldgs., Inc., C.A. No. 2022-0727-MTZ (Del. Ch. Sept. 27, 2023) - Although the Court of Chancery frequently resolves contractual disputes, it grants contractual reformation only when...more

Morris James LLP

Chancery Concludes Accountant Provision in Stock Purchase Agreement Calls for Expert Determination Rather than Arbitration

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ArchKey Intermediate Holdings Inc. v. Mona, C.A. No. 2021-0383-JTL (Del. Ch. Oct. 3, 2023) - Parties to a stock purchase agreement disputed post-closing price adjustments. The agreement called for an independent accountant...more

Morris James LLP

Supreme Court Upholds Contractual Voidness Provision in LLC Agreement

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Holifield v. XRI Investment Holdings, LLC, No. 407, 2022 (Del. Sept. 7, 2023) - This decision concerned the disputed transfer of a member's LLC units. Below, the Court of Chancery held that the disputed transfer was...more

Morris James LLP

Chancery Denies Specific Performance in De-SPAC Transaction Based on Difficulty of Enforcement and Plaintiff’s Inequitable Conduct

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26 Capital Acquisition Corp. v. Tiger Resort Asia Ltd., CA No. 2023-0128-JTL (Del. Ch. September 7, 2023) - Even where the parties have contractually agreed that specific performance is the preferred remedy for a breach,...more

Davies Ward Phillips & Vineberg LLP

“Con Ed” Damages in Canadian Public M&A: Revisiting Cineplex v Cineworld in Light of Recent Delaware Case Law

What is a spurned seller’s recourse when a buyer walks away from a deal in breach of the purchase agreement? In private M&A, the answer is reasonably straightforward: sue the buyer to close the deal or to recover damages. In...more

McGlinchey Stafford

Can I Lose the Ability to Compel Arbitration? - McGlinchey Commercial Law Bulletin - December 28 2023

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Intrusion Upon Seclusion- Feasby v. Logan, 3rd Appellate District Paulding County (Ohio Ct. App. 2023)- In this appeal, the Third Appellate District reversed the trial court’s decision to grant judgment on the pleadings...more

Stikeman Elliott LLP

Limitations on Good Faith Damages: No Presumption of Loss for Breach of Honest Performance

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In Bhatnagar v. Cresco Labs Inc., 2023 ONCA 401, the Ontario Court of Appeal elaborated on the Supreme Court’s decision in C.M. Callow Inc. v. Zollinger, 2020 SCC 45 (“Callow”) and clarified that a breach of the contractual...more

Morris James LLP

Chancery Finds that Buyer Breached Purchase Agreement by Denying Sellers’ Rights to Participate in a Defense

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LPPAS Representative, LLC v. ATH Holding Co. LLC, C.A. 2020-0241-KSJM / Shareholder Representative Services LLC v. ATH Holding Co. LLC, C.A. No. 2020-0443-KSJM (Del. Ch. May 2, 2023) - Delaware law recognizes parties’...more

Morris James LLP

Delaware Corporate and Commercial Case Law Year in Review - February 2023

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This top ten list summarizes significant decisions of the Delaware Supreme Court and the Delaware Court of Chancery over the past calendar year. Our criteria for selection are that the decision either meaningfully changed...more

Goodwin

“Good Faith” in Shareholders’ Agreements: What Does it Mean?

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Shareholder agreements often include an obligation that the shareholders must act with “good faith” in their dealings with one another and with the company. However, what does that actually mean? In this insight, we consider...more

Morris James LLP

Chancery Suggests Alternative Approach To Contracts Providing That Prohibited Acts Are Void Ab Initio

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XRI Investment Holdings LLC v. Holifield, et al., C.A. No. 2021-0619-JTL (Del. Ch. Sept. 13, 2022) - Under precedents such as CompoSecure, L.L.C. v. CardUX, LLC (Del. 2018), acts defined by an LLC agreement as “void” or...more

Hendershot Cowart P.C.

Shareholder Actions: Direct Vs. Derivative Suits

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When it comes to protecting their interests – or the interests of the corporation – shareholders have unique rights to take legal action. They can file suit either on behalf of the corporation itself, known as a derivative...more

A&O Shearman

Keeping the Faith: English Court of Appeal Considers Contractual Good Faith Provision in Shareholder Agreement

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The English law concerning contractual duties of good faith (express and implied) has received considerable judicial attention in recent years. It will therefore be of interest to those who use English law contracts,...more

Morris James LLP

Chancery Resolves Section 225 Dispute and Declines to Invalidate Written Consents

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Zhou v. Deng, C.A. No. 2021-0026-JRS (Del. Ch. Apr. 6, 2022) - When deciding a summary proceeding regarding a disputed corporate office under Section 225 of the DGCL, the Court of Chancery may consider whether an election,...more

Fox Rothschild LLP

Minority Shareholders can “Follow the Money” Linked To Alleged Diversions by Majority for Phantom Salaries and Benefits

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The minority shareholders of a podiatry practice felt like they had been kicked around by the alleged financial misadventures of two colleagues who together controlled an 80 percent interest....more

Pillsbury Winthrop Shaw Pittman LLP

Investment Opportunities Abound in Japan’s M&A Market

The outlook for inbound mergers and acquisitions opportunities in Japan is bright with the yen at a 20-year low. The yen’s recent plunge to around 135 to the U.S. dollar has made Japanese assets approximately 20% cheaper...more

Goodwin

Delaware Chancery Court Clears Musk of Breach of Fiduciary Duty Claim

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On April 27, 2022, the Delaware Court of Chancery in In re Tesla Motors Stockholder Litigation rendered a post-trial verdict finding for Elon Musk, co-founder and CEO of Tesla Motors, Inc., on claims that Musk breached his...more

Morris James LLP

Chancery Dismisses Action for Declaratory and Injunctive Relief for Lack of Subject Matter Jurisdiction on Grounds that the...

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Qlarant, Inc. v. IP Commercialization Labs, LLC, C.A. No. 2021-0574-MTZ (Del. Ch. Jan. 25, 2022) - Pursuant to an asset purchase agreement, the plaintiff buyer purchased assets from a seller and several of its affiliates....more

Goodwin

Delaware Chancery Court Dismisses Cigna Derivative Suit Over Failed Anthem Merger

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Delaware Chancery Court Dismisses Cigna Derivative Suit Over Failed Anthem Merger; The PCAOB Sanctions Former KPMG Vice Chair Of Audit For Failure To Supervise Senior Members Of KPMG's Audit Practice; Ninth Circuit Affirms...more

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