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Class Action Alleging Self-Interested Conversion From LP To LLC Certified In Delaware

Garrett v. Zon Capital Partners, L.P., C. A. No. 5607-CS (Del. Ch., Nov. 10, 2011), read letter ruling here.

Issue Addressed:

Whether a motion for class certification should be granted pursuant to Court of Chancery Rule 23 in connection with a complaint that alleges a self-interested transaction in which a majority of limited partners voted to convert an LP into an LLC.

Brief Background:

The defendants largely agreed to class certification under Rule 23. The LLC involved had 4 classes of membership: A, B, C and D. The defendants only objected to the inclusion in the class of 10 Class B Members who also made investments as Class A Members. They argued, based in part on deposition transcripts, that those who were both Class B Members and Class A Members had conflicting economic interests as compared to those who were only Class B Members.

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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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