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.”
SPONSORS: Bonini, Kowalko, Bennett, Briggs King, Ramone, Wilson
HISTORY: Placed in the Senate Elections & Government Affairs Committee on 3/30/17
STATUS: Waiting on a hearing in committee.