General Assembly Vote Tracker

SB53 – A Transperfect Fix?

You may recall ads on TV, radio and in the newspaper a couple of months ago concerning litigation before the Delaware Supreme Court that could affect the continued existence of a court reporting, translation, and document management company called TransPerfect. The company was owned by a couple, who were once engaged, Phil Shaw and Liz Elting. But their personal split has led to infighting in the business, which has led to litigation in Delaware’s Chancery Court.   Last year, the Chancery Court ordered the sale of the company after concluding that fighting between Shawe and Elting, created “a dysfunctional atmosphere” that could harm both clients and employees.   Noted Delaware legal scholar Rudy Giuliani criticized the decision as judicial overreach.  Those who actually work in Delaware Corporate law, however, say the Chancellor accurately applied Delaware Law in this situation.

Regardless, Senator Bonini seeks to a fix a problem by making it worse it would seem. His SB53 would require the Court of Chancery to wait three years before it can order the sale of a company. It also will include other measures including the appointment of directors to break management deadlocks to avoid a sale.   I do not see how extending business infighting for three years is beneficial to the company.

The Delaware Bar Association’s Corporate Law Council has refused to endorse the proposal, which is probably a death knell for this bill.

The Corporate Law Council typically endorses proposed legislation before it is introduced in the General Assembly. Members of Delaware’s corporate bar said they couldn’t recall the last time a legislative change to Delaware’s General Corporation Law was approved by the Legislature without the bar association’s recommendation.

“The partnership between the Corporate Law Council and the General Assembly has been a very successful one for the last 50 years,” said Lawrence A. Hamermesh, a professor of corporate law at Widener University’s Delaware Law School. “I hope that trust continues if the council says, ‘We don’t think it is a good idea,’ that judgment would be respected.”

AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO THE GENERAL CORPORATION LAW.


UPDATED: 4/11/17


SPONSORS: Bonini, Kowalko, Bennett, Briggs King, Ramone, Wilson


YES VOTES:


NO VOTES:


HISTORY: Placed in the Senate Elections & Government Affairs Committee on 3/30/17


STATUS: Waiting on a hearing in committee.


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3 comments on “SB53 – A Transperfect Fix?

  1. A better fix would be to prohibit a 50-50 split of shares in a two-person corporation — or maybe that is already on the books. When Transperfect was incorporated, Elting got 50 shares, Shaw 49, and Shaw’s mother 1 (I believe I read this in the News Journal). I also believe that Shaw is behind the “employee-driven initiative” to prevent the sale of the company. If he cared so much for his employees, he would compromise with his partner to divvy the company up without destroying it. I don’t know a single freelance translator who enjoys working with Transperfect (I never did), and I’ve read on GlassDoor that it can be awful to work there as a low-ranking employee.

  2. So this bill gives the court the opportunity to let a company further damage itself, its employees and its value for another three years. That’s a pretty crazy conception of afixing this kind of problem. Plus, it seems to me that these people allocated this company knowing the risk of this split of ownership — it is overreach to pretend that a “time out” would somehow make any difference.

  3. Aw, this was a really nice post. Taking the time and actual
    effort to produce a top notch article… but what can I say… I put things off a lot and don’t seem to get nearly anything done.

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