Corporate

Chancery Grants Petition to Dissolve Deadlocked Corporation

 In The Matter of Bermor, Inc., C.A. No. 8401-VCL (Del. Ch. Feb. 9, 2015).  

This Delaware Court of Chancery opinion is noteworthy for its pithy analysis of a petition to dissolve a deadlocked corporation pursuant to DGCL Section 273, which is a statutory provision that empowers the Court with discretion to dissolve a corporation when it has two 50/50 stockholders who are deadlocked. Many Section 273 cases involve complicated facts and denials of requests for dissolution if the court does not believe the statutory requirements are met. In this case, the general partners of limited partnerships were corporations that were owned 50% each by two individuals. The general partners managed the real estate owned by the LPs. One 50% owner of the corporate general partner wanted liquidity more than the other. They could not agree on how to resolve their different goals for the entities.

This decision provides a succinct and exemplary explanation of the prerequisites of Section 273 and why they were satisfied based on the facts of this case. Must reading for anyone who needs to understand the latest Delaware law on Section 273.

This decision should also win an award for the most succinct Chancery opinion in years. It includes a thorough analysis and cogent reasoning in the fewest number of pages possible. By comparison with typical Chancery decisions that are often 50 pages or more, the length of this decision is the proportionate equivalent of a synopsis–yet it does not lack completeness.  In this post-trial opinion, the Court rejected the argument that there was something other than a good faith basis to request dissolution.

 Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Eckert Seamans.

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