Insights Archive

In Oxbow Carbon & Minerals Holdings, Inc. v. Crestview-Oxbow Acquisition, LLC, the Delaware Supreme Court affirmed in part and reversed in part a decision by the Court of Chancery that used the implied covenant of good faith and fair dealing to permit minority members (the “Minority Members”) of a Delaware limited liability company (the “LLC”) to cause a sale of the LLC despite the right of certain holders (the “Small Holders”) to block the sale. 

On January 16, 2019, the U.S. District Court for the District of Delaware released a Notice regarding Court operations during the current lapse in appropriations.

On August 1, 2018, the Delaware Limited Liability Company Act (DLLCA) was amended to add, among other things, a division statute (Amendments). The Amendments included new Section 18-217 which permits a Delaware limited liability company (LLC) to divide into two or more LLCs (each a Division company).

Over the last decade, trust law has evolved so the role of trustee can better reflect the open architecture that modern families desire. It’s now commonplace for trust settlors to design so-called “directed trusts,” and existing trusts are frequently transferred to new jurisdictions to be modified through the use of techniques such as decanting, non-judicial settlements agreements, consent modifications, court orders and trust mergers so they can become directed trusts.

On October 1, 2018, the U.S. District Court for the District of Delaware provided an update on case assignments and magistrate judges. The announcement was issued a month and a half after the Court welcomed new Judges Colm F. Connolly and Maryellen Noreika and eliminated the vacant judgeship docket.

The 2018 amendments to the Delaware General Corporation Law (the "DGCL") were recently enacted. The amendments update the ratification statute, Section 204, to address recent case law. Nonstock or "membership" corporations are now also permitted to use the statutory ratification provisions to cure corporate defects.

Recently enacted legislation (“Trust Act 2018”) provides settlors, beneficiaries, fiduciaries and nonfiduciary powerholders with an even greater ability to accomplish their objectives using Delaware trusts.

Delaware recently passed amendments to the Delaware Limited Liability Company Act that enable a new type of series of an LLC known as a “registered series.” The changes address historical uncertainty among lenders seeking to perfect a security interest with respect to a secured lending transaction involving a series of a Delaware limited liability company as a borrower.

In its last session, the Delaware legislature passed a number of amendments to the Delaware General Corporation Law (the “DGCL”) and the Delaware “alternative entity” statutes - the Delaware Limited Liability Company Act (the “DLLCA”), the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”), the Delaware Revised Uniform Partnership Act (the “DRUPA”) and the Delaware Statutory Trust Act (the “DSTA”).

On August 10, 2018, the U.S. District Court for the District of Delaware officially welcomed the Honorable Colm F. Connolly and the Honorable Maryellen Noreika as United States District Court Judges. Both were sworn in to office this week.

We are pleased to announce that Maryellen Noreika and Colm Connolly were confirmed by the U.S. Senate on August 1 to serve as District Judges on the United States District Court for the District of Delaware.

Statutory appraisal remedies allow stockholders who believe they have received inadequate consideration in certain transactions, such as mergers or consolidations, to obtain a judicial determination of the fair value of their shares. Over the years, courts, litigants, and experts alike have grappled with how to make an appropriate fair value determination. To marshal the evidence necessary to most favorably present their case, it is vital for counsel involved in appraisal proceedings to understand the relevant statutory requirements and stay up to date on the shifting case law, including the valuation approach courts are likely to prefer in a given situation.

In In re Energy Transfer Equity L.P. Unitholder Litigation, the Court of Chancery of the State of Delaware concluded that a private offering of securities by Energy Transfer Equity, L.P. (ETE) breached its limited partnership agreement (LPA).

On April 6, 2018, the Corporation Law Section of the Delaware State Bar Association approved amendments to the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq. (the “DLLCA”), the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101 et seq. (the “DRULPA”), and the Delaware Revised Uniform Partnership Act, 6 Del. C. §§ 15-101 et seq. (the “DRUPA”).

Morris Nichols maintains a Cumulative Survey of Delaware case law relating to alternative entities that is updated annually, organized by subject area and includes most cases that address significant alternative entity issues.

On February 6, 2018, the District of Delaware announced new case assignment procedures in light of Senior Judge Sleet’s decision to retire from the bench this fall and the two judicial vacancies.

In Miller v. HCP & Company, 2018 WL 656378, the Court of Chancery granted defendants’ motion to dismiss an action seeking relief under the implied covenant of good faith and fair dealing under the subject company’s limited liability company agreement (LLC Agreement) in connection with a sale of the subject company pushed by the defendants. 

For many years Delaware corporate law was mainly public company law. But now there is a critical mass of case law relevant to private and venture-backed companies, with 2017 adding to that law perhaps more than any prior year.

New rules for partnership tax audits (the “New Rules”) included in the Bipartisan Budget Act of 2015 shall become effective for partnership tax returns filed for tax years beginning after December 31, 2017.

Morris Nichols partner RJ Scaggs is coauthor of the Bloomberg BNA Corporate Practice Series Portfolio, Derivative Lawsuits. The recently revised treatise, updated on a roughly biennial basis, explores all facets of derivative litigation. 

Morris Nichols attorneys A. Gilchrist Sparks III and Daniel D. Matthews co-authored the closing chapter in a treatise on legal developments in Delaware and the First State’s contributions to US corporate law.

On December 20, 2017, the President nominated Maryellen Noreika and Colm F. Connolly to serve as judges on the United States District Court for the District of Delaware. When confirmed, they will fill the vacancies created by Judge Robinson’s retirement and Judge Sleet taking senior status.

Litigation in Delaware in 2017 has somewhat turned on its head the long-held expectation that “every public deal draws a lawsuit” but “private company stockholders rarely sue.”

Delaware enacted a major overhaul of its unclaimed property statute on February 2, 2017. The New Act affects companies currently under audit, companies in the Delaware voluntary disclosure program (a “VDA”) and any other companies that have unclaimed property reporting obligations to Delaware.

On August 30, 2017, Delaware Governor John Carney signed House Bill 169 into law (“Trust Act 2017”), which provides settlors, beneficiaries and fiduciaries of Delaware trusts with more tools and greater flexibility to confidently accomplish their various objectives.

On June 21, 2017, the Delaware Supreme Court affirmed a landmark decision by the Delaware Court of Chancery (the “Court”) that found an “adviser,” within the meaning of 12 Del. C. § 3313, liable for breach of his fiduciary duties.  This decision is especially noteworthy because it provides significant insight into the Court’s views with respect to the willful misconduct and bad faith standards of liability as well as the application of virtual representation principles to the statute of limitations defense.  While we previously summarized the Court’s substantive analysis of these issues when the Master’s Draft Report was issued in 2014, and again when the Master’s Final Report was issued in 2015, the long and somewhat complicated history of this case and the weight of its importance warrant additional presentation of its analysis.

On July 2, 2017, Delaware Governor John Carney signed into law House Bill No. 16, as amended, repealing Delaware’s estate tax for decedents who die after December 31, 2017.  The repeal of Delaware’s estate tax will provide a substantial benefit to not only Delaware residents with taxable estates but also the estates of many nonresidents who die owning real or tangible personal property located within Delaware.

A Q&A guide to responding to a complaint in a trial court of general jurisdiction in Delaware.

The Delaware Supreme Court and the Court of Chancery recently issued guidance for directors navigating the complex fiduciary issues that arise around insolvency.

Whether a public company should engage in a “single-bidder” process is one of the most difficult questions a target public company’s board of directors must consider during the early stages of a transaction.

On May 26, 2017, the U.S. District Court for the District of Delaware announced that, due to the Court’s two vacancies, it has invited judges from outside the District to handle certain cases.

The Delaware Supreme Court decided a case this week that is of great importance to Delaware trust law involving the enforceability of a spendthrift provision and the protection of trust assets against the claims of a beneficiary’s creditors relating to breaches of fiduciary duties by the beneficiary which arose in a separate but related action.  This opinion is notable because it is a strong confirmation of the protections available to beneficiaries of third-party spendthrift trusts in Delaware under Section 3536 of Title 12 of the Delaware Code (“Section 3536”).  Importantly, the Delaware Supreme Court has affirmed the narrow application of the Garretson case and, in doing so, we are provided with helpful analysis as to the rationale of the holding in Garretson and related cases.  The Court refused to create a public policy exception to Section 3536 for a tort claimant who was a family member of the plaintiffs and who allegedly persistently engaged in a course of conduct that breached his fiduciary duties resulting in millions of dollars of damages for plaintiffs.  This opinion will likely have importance around the country considering the paucity of case law on the subject and the relevance of the Delaware Supreme Court.  While we previously summarized the substantive analysis of this case when the Draft Master’s Report of the Delaware Court of Chancery was issued in 2014, the long history of this case and the weight of its importance warrants additional presentation of its analysis.  The procedural history of this case is somewhat long and complicated, but is also notable for its exemplary judicial process and expediency.

Today, the Delaware District Court announced that as of May 1, 2017, the Honorable Gregory M. Sleet will take senior status. Judge Sleet has served nearly 19 years on the bench, including as Chief Judge from 2007 to 2014, and has handled some of the most complex patent cases in the nation. The Court noted that Judge Sleet intends to render substantial judicial service as a Senior Judge. The Court will have two vacancies as of May 1, 2017 as Judge Robinson took senior status earlier this year. The Court hopes to fill the vacancies in a timely manner.

On Monday, March 27, 2017, the Corporation Law Section of the Delaware State Bar Association approved amendments to the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq. (the “DLLCA”), the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101 et seq. (the “DRULPA”), and the Delaware Revised Uniform Partnership Act, 6 Del. C. §§ 15-101 et seq. (the “DRUPA”).  The amendments are subject to further approval in the Bar process and, if approved, will be introduced and considered by the Delaware legislature.  The amendments include a number of “clean up” changes as well as certain substantive improvements relating to, inter alia, delegation, formation requirements and limited partner safe harbors, which are described below.  If approved by the Bar and the legislature and signed by the Governor, the amendments will become effective on August 1, 2017.

On February 1, 2017, the United States Bankruptcy Court for the District of Delaware (the “Delaware Bankruptcy Court”) released the 2017 version of the Local Rules for the United States Bankruptcy Court District of Delaware (Effective February 1, 2017) (the “Local Rules”). As a courtesy to our clients and friends, the Morris Nichols Business Reorganization & Restructuring Group has summarized the most significant revisions to the Local Rules relevant to business bankruptcy practice in the Delaware Bankruptcy Court.

On February 3, 2017, the United States District Court for the District of Delaware announced that with the celebration of her birthday today, Judge Sue L. Robinson has officially become a Senior United States District Court Judge.  With Judge Robinson’s senior status, the Court has modified certain case assignment practices.

Now enacted, Senate Bill 13 alters the Delaware unclaimed property landscape significantly, and holders should make sure to give it a close review.

If enacted, Senate Bill 13 will overhaul the Delaware unclaimed property landscape significantly, requiring close attention from holders.

This article addresses a few recent Delaware commercial law developments that are particularly relevant to drafting and interpreting certain provisions in merger agreements, stock purchase agreements, asset purchase agreements and other transaction documents.

PLR 20146014 addressed all of the rulings relevant to the tax structure of a so-called DING trust, except that there is one major factual difference upon which the IRS ruled.

The 2016 amendments to the Delaware General Corporation Law (the “DGCL”) were recently enacted.

In Plains All American Pipeline, L.P. v. Cook, the Court ruled on a holder’s standing to sue third party contract auditors, the ripeness of challenges to unclaimed property audit methodologies (including estimation), and the constitutionality of the State’s selection of holders for audit.