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1
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MEMORANDUM OPINION
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EXTRACTED KEY WORDS
LIQUIDATION ASSETS SALE PREFERENCE SHARES COMMON QUADRANGLE NOTE HOLDERS STOCK SEVERANCE ALLOWANCE PRIDES DELAWARE SHAREHOLDERS ECOELECTRICA CERTIFICATE SENIOR NOTE PLAINTIFFS FACTO LIQUIDATION CONSTRUCTION BANKRUPTCY MANDATORY CONVERSION IMPLIED COVENANT KWI SUBSIDIARIES NOTE HOLDERS COMMITTEE CORPORATE FORM KENETECH SOLD INVOLUNTARY LIQUIDATION ABANDONMENT |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
QUADRANGLE OFFSHORE (CAYMAN) )
LLC and CERBERUS PARTNERS, L.P., ) -
> i; ~,~~~:~>
Plaintiffs, >> "-I
V. >
KENETECH CORPORATION,
Defendant.
Submitted: May 25, 1999
Decided: October 13, 1999
MEMORANDUM OPINION
Alan J. Stone and David J. Teklits of Morris, Nichols, Arsht & Tunnell,
Wilmington, Delaware. OF COUNSEL: Kronish, Lieb, Weiner & Hellman, New
York, New York. Attorneys for Plaintiffs.
Charles F. Richards, Jr., Raymond J. DiCamillo and Megan Semple Greenberg of
Richards, Layton & Finger, Wilmington, Delaware. Attorneys for Defendant.
STEELE, V.C.
Does a Delaware corporation's Board create a de facto liquidation where it
approves shutting down primary operations, embarks upon a sale of assets, grants
its CEO a lavish severance allowance while continuing to employ him, and takes
no action to block the CEO's purchase of 13 million shares of the corporation's
common stock for $1 ,OOO?
Do these actions constitute a liquidation which triggers preferences
for the corporation's preferred shareholders under the Certificate of Designations
and/or breach the Certificate's implied covenant of good faith and fair dealing?
I conclude, after hearing the evidence at trial and considering the post-
trial submissions, that the corporation's board's course of action did not constitute
a liquidation under Delaware law, that the actions did not trigger the liquidation
preference contained in the Certificate of Designations, that the actions taken were
reasonable, that they were designed to respond to potential insolvency in good faith
and that any alleged wrongdoing by the Board or the corporation's officers did not
specifically relate to bad faith refusal to declare formal or final approval of a
liquidation of the corporation.
SNIPPETS:
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2
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DEFENDANTS ANSWERING POST-TRIAL BRIEF
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EXTRACTED KEY WORDS
ECOELECTRICA LIQUIDATION PLAINTIFFS ASSET SALE LIQUIDATION PREFERENCE CONTRACT RLF COURT SELL DEL PRIDES KENETECH BOARD COMMON STOCK AGREEMENT SHAREHOLDERS PREPA BANKRUPTCY MANDATORY CONVERSION CERTIFICATE EC6ELECTRICA QUADRANGLE OFFSHORE LLC ACCORDANCE CONTRACT PRINCIPLES DESIGNATIONS DIVIDENDS NOTEHOLDERS CONSTRUCTION FINANCING |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
QUADRANGLE OFFSHORE (CAYMAN) )
LLC and CERBERUS PARTNERS, L.P., )
>
Plaintiffs, )
1
V. > C.A. No. 16362
>
KENETECH CORPORATION, > L
Defendant. j
DEFENDANT'S ANSWERING POST-TRIAL BF&EF
Charles F. Richards, Jr.
Raymond J. DiCamillo
Michael D. Allen
Richards, Layton & Finger
P.O. Box 551
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Defendant
Dated: May 10, 1999
RLF 1-2008024-l
TABLE OF CONTENTS
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