Insights Archive

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.

The Delaware Court of Chancery opinion in Obeid v. Hogan addresses the ability of managers of a limited liability company to delegate to non-managers, illustrating the importance of careful drafting in alternative entity governance documents.

This article discuss the availability and specifics of these programs in seven states.

On June 28, 2016, the United States District Court for the District of Delaware issued an opinion in the case of Temple-Inland, Inc. v. Cook, Civ. No. 14-654-GMS, granting in part and denying in part cross motions for summary judgment filed by the State of Delaware (the “State”) and Temple-Inland, Inc. (the “Company”). Significantly, the Court granted the Company’s claims that the State’s audit conduct violates substantive due process rights under the United States Constitution. Declining the State’s invitation to abstain from deciding the case pending a review by a Delaware state court of the statute allowing for the extrapolation and estimation of liability for periods for which a holder lacks records, the Court held that the combined effect of several aspects of the State’s executive actions created a game of “gotcha” which “shocks the conscience.”

Delaware’s House and Senate have recently passed a change to Delaware’s PPLI premium tax that makes Delaware much more competitive with other jurisdictions that have historically attracted virtually all of the PPLI trust planning business.

The Delaware Supreme Court recently issued an important opinion overruling its long-standing decision in Sternberg v. O’Neil, 550 A. 2d 1105 (1988) and holding that the Delaware registration statute does not provide a basis for asserting general personal jurisdiction over foreign corporations in Delaware.

New rules for partnership tax audits (the “New Rules”) were adopted that may require changes to the governing documents of existing and future partnerships, limited liability companies and other entities taxed as partnerships for federal income tax purposes.

In the last quarter of 2015, the Delaware courts issued three opinions and one oral ruling of importance to practitioners advising on private company transactions. Two of the opinions provide insight into the treatment of fraud claims in the acquisition context under Delaware law, especially the element of reliance, and how to successfully disclaim reliance on representations outside the acquisition agreement. 

Instead of debating the merits of the outcome in Rural/Metro, this article begins from that outcome and contains our thoughts on the drafting and implementation of financial advisor engagement letters in a post-Rural/Metro world.

A periodic “heads-up” of legal developments in Delaware relevant to venture and private equity funds.

Judge Kevin Carey provides significant guidance to debtors and landlords calculating rejection damages claims.

Proper drafting and administration can reduce doubt about who’s responsible for a particular matter.

The 2015 amendments to the Delaware General Corporation Law (the “DGCL”)  address important policy topics and make certain technical improvements that should interest practitioners, including changes to the board approvals required to issue stock and changes to Delaware’s statute on ratification of corporate defects.

Practitioners do not need to throw out the carefully crafted partnership agreements used by master limited partnerships because of the recent decision in In re: El Paso Pipeline Partners, LP.

In its last session, the Delaware legislature passed a number of amendments to the Delaware General Corporation Law (“DGCL”) and to three of Delaware’s four “alternative entity” statutes.

The speed with which this legislation passed indicates that Delaware is serious about reforming its Unclaimed Property Program.

The Delaware Court of Chancery in LongPath Capital, LLC v. Ramtron International Corp. relied on the negotiated merger price as the best evidence of “fair value.”

On June 16, 2015, Senate Bill No. 141 was introduced in the Delaware State Senate.

Morris Nichols attorneys Bill Lafferty, John DiTomo and Mac Measly contributed this article on the Delaware Court of Chancery ruling in Healthways II concerning a so-called “dead hand proxy put” provision in a credit agreement.

On June 16, 2015, Senate Bill No. 141 was introduced in the Delaware State Senate.  This bill proposes what may well be the most important statutory changes ever made to the existing Delaware Unclaimed Property Program. 

The way plaintiffs plead direct patent infringement may be about to change.

It is important to consider how the indemnification regime will be enforced against stockholders of the seller corporation in a private corporation acquisition structured as a merger.