VIEWPOINT: U.S. Energy Ruling Could Invite Further Shareholder Litigation, By Michael P. Richman and Michael Nestor

It is hard to conceive of an event more distracting and potentially damaging to a chapter 11 debtor than scheduling and conducting a shareholder meeting that threatens to unseat the company's board and management. Such an event could alter not only the corporate structure and governance of a debtor, but could undermine the confidence of employees, vendors and customers at an especially tenuous time in the company's corporate life.

In light of these facts, is the scheduling of a shareholder meeting a "process...against the debtor that was or could have been commenced before the commencement of the case" or an "act...to exercise control over property of the estate," either of which would represent violations of the automatic stay? Probably not, at least according to a recent decision by the Court of Chancery of the State of Delaware (See Asher E. Fogel v. U.S. Energy Systems, Inc. et al.).

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