Fiduciary Duty, Preferred Shares

Delaware Court of Chancery Confirms Enforceability of NVCA Covenant Not to Sue for Breach of Fiduciary Duty

Troutman Pepper on 6/8/2023

In New Enterprise Associates 14, L.P. v. Rich, the Delaware Court of Chancery held that a covenant not to sue for breach of fiduciary duty, which was contained in a stockholder's agreement and modeled after the NVCA model...more

Management and Common Stockholder Resistance to Acquisitions, and Using Carve-Outs to Overcome It

Farrell Fritz, P.C. on 8/26/2020

This past June, autonomous vehicle technology startup Zoox agreed to be acquired by Amazon for a whopping $1.3 billion. Time for the common stockholders to pop the champagne, right? Not exactly, according to a complaint...more

An Illustration of Remote Controller Fiduciary Liability

Gray Reed on 8/4/2020

Under Delaware law, indirect controllers of a Delaware limited liability company (“LLC”) can owe limited fiduciary duties to the LLC and its members if they exert control over the LLC’s assets, unless those duties are clearly...more

Chancery Enforces Preferred Stock Consent Rights, and Reasons that Designee of a Corporate Stockholder Is an “Affiliate” of that...

Morris James LLP on 10/25/2019

PWP Xerion Holdings III LLC v. Red Leaf Resources Inc., C.A. No. 2017-0235-JTL (Del. Ch. Oct. 23, 2019). Preferred stockholders frequently obtain the right to veto specific types of transactions....more

Chancery Rejects Attempt to Allege Gentile v. Rossette Direct Claims for Dilutive Preferred Stock Issuances

Morris James LLP on 10/15/2019

Silverberg v. Padda, C.A. No. 2017-0250-KSJM (Del. Ch. Sept. 19, 2019). The Court of Chancery held that plaintiff common stockholders’ fiduciary duty claims challenging the company’s overpayment for dilutive preferred...more

Common Misconceptions Regarding Preferred Stock Create Risk of Costly Mistakes

Foley & Lardner LLP on 7/30/2018

Preferred stock is commonly used for venture capital and private equity investments. It gives the investor the ability to convert to common stock if the deal succeeds, and also includes protection of the liquidation...more

Venture Capital Firms and Their Portfolio Company Directors Face Risk of Liability for Conflicts of Interest

Foley & Lardner LLP on 4/30/2018

Venture capital firms and their director designees on portfolio company boards can find themselves stuck between their fiduciary duty to common shareholders and the terms of preferred investment documents. Before any other...more

Funds Talk: July 2017 - Hsu v. ODN Holding Corp. and the Rights of (un)Preferred Stockholders

Kramer Levin Naftalis & Frankel LLP on 7/10/2017

In a recent opinion, Hsu v. ODN Holding Corp. (Del. Ch. April 25, 2017) (“ODN”), the Delaware Court of Chancery refused to dismiss a lawsuit alleging that the company’s directors and others breached their fiduciary duties by...more

Debt Dialogue: June 2017 - Hsu v. ODN Holding Corp. and the Rights of (un)Preferred Stockholders

Kramer Levin Naftalis & Frankel LLP on 7/6/2017

In a recent opinion, Hsu v. ODN Holding Corp. (Del. Ch. April 25, 2017), the Delaware Court of Chancery refused to dismiss a lawsuit alleging that the company’s directors and others breached their fiduciary duties by selling...more

Delaware Court Of Chancery Identifies Fiduciary Duty Constraints On Preferred Equity

Cole Schotz on 6/21/2017

A recent decision of the Delaware Court of Chancery (the “Court”) places certain fiduciary constraints on a company’s ability to satisfy its obligations to its preferred equity holders. While investors often seek to acquire...more

Irredeemable: Delaware Case Will Make Redemption Rights Tougher to Enforce

Farrell Fritz, P.C. on 5/31/2017

Venture capital funds routinely negotiate for a right of redemption – the right to require the company to buy out their shares after a certain period of time if an exit has not occurred – as a key element of their exit...more

Federal Circuit Rules that Starr International Lacks Standing to Pursue Class Claims Stemming from the U.S. Government’s...

Mintz - Securities Litigation Viewpoints on 5/24/2017

On May 9, 2017, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed in part and reversed in part an earlier decision from the U.S. Court of Federal Claims, which had held that aspects of the...more

Is There A “Revlon Duty” In California?

Allen Matkins on 5/18/2017

There are certain seminal Delaware corporate law cases that are so well known that corporate lawyers are wont to assume that they have been adopted and followed everywhere. One such case is Revlon, Inc. v. MacAndrews &...more

Mergers & Acquisitions Glossary

Adler Pollock & Sheehan P.C. on 8/19/2015

This Glossary contains many of the important terms and definitions used in the M&A world. The Glossary is not exhaustive, however. Like most areas of the law, M&A is a highly complex subject that involves several legal and...more

Delaware Court Issues Important Trados Decision Delineating Director Duties in Sale of Venture-Backed Company

Foley Hoag LLP on 9/18/2013

The Delaware Chancery Court issued its long-awaited post-trial decision last month in In re Trados Incorporated Shareholder Litigation. In the decision, the court affirmed that directors designated by the venture capital...more

Directors Designated By Venture Capitalists And Other Preferred Stockholders Need To Be Mindful Of Inherent Conflicts: In re...

Troutman Pepper on 9/5/2013

A recent post-trial decision by Vice Chancellor J. Travis Laster of the Delaware Court of Chancery puts directors serving as designees of preferred investors on notice that they must attempt to maximize value for common...more

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