The Delaware Supreme Court vacated a Chancery Court ruling that a common law “insolvency exception” to state corporation law eliminates a requirement for a stockholder vote before directors can transfer the company’s assets.
The unanimous decision by the five-member court removed an injunction approved by Vice Chancellor J. Travis Laster in December 2020 barring 3-D television tech venture Stream TV Networks Inc. from interfering in the company’s turnover without a stockholder vote to a creditor-controlled venture, SeeCubic Inc.
In a comment after release of the decision, Andrew Dupre of McCarter & English LLP, counsel to Stream TV, said: “Today, the Delaware Supreme Court unanimously rejected the Court of Chancery’s prior, novel opinion that shareholders lose their charter and statutory voting rights upon an insolvency event. To the contrary, both Stream TV’s charter specifically and Delaware corporation law generally guarantee the right of shareholders to vote to block a transfer of substantially all of the corporation’s assets.”
The state’s justices, Dupre said, “cleared away a cloud on the class voting rights embodied in tens of thousands of Delaware corporate charters today, and reaffirmed that Delaware will enforce the shareholder franchise.”
Stream TV Networks is represented by Andrew S. Dupre, Steven P. Wood, Brian R. Lemon, Stephanie H. Dallaire and Sarah E. Delia.