D&O Fiduciary Duties to Multiple Classes of Stockholders

Description

Advising corporate boards regarding the fiduciary duties they owe the company and its shareholders is a growing challenge for counsel as more companies face financial distress. This task is even more complicated when the corporation has multiple classes of stockholders.

A recent Delaware case, In re Trados Inc. Shareholders Litigation, provides meaningful guidance on the duties directors and officers owe multiple classes of stockholders. In re Trados intersects with Delaware's developing "zone of insolvency" case law, also a current concern for corporations.

Another recent Delaware case, In re John Q. Hammons Hotels Inc. Shareholders Litigation, helps clarify applicable fiduciary duties owed in transactions involving dual class companies and provides guidance for counsel in such transactional situations.

Listen as our panel of corporate attorneys discusses the implications of In re Trados, In re John Q. Hammons Hotels, and other recent Delaware cases for directors and officers; explains the fiduciary duties owed to multiple shareholders; and offers best practices to minimize the risk of breach of fiduciary duty lawsuits.

Outline

1. Review of current Delaware case law and implications
   1. In re Trados Inc. Shareholders Litigation (Delaware Chancery Court, July 24, 2009)
   2. In re John Q. Hammons Hotels Inc. Shareholders Litigation (Delaware Chancery Court, October 2, 2009)
   3. “Zone of insolvency” developing case law (E.g., North American Catholic Education Programming Foundation v. Gheewalla, 930 A.2d 99 (Del. 2007)
2. Strategies to minimize liability risk
   1. Deliberate decision-making in best interest of entire company
   2. Business judgment rule and “entire fairness” test
   3. When necessary and how to structure them
   4. Disguised “deepening insolvency” claims
   5. Claim preclusion
   6. Derivative suits
   7. Indemnification

Benefits

The panel will review these and other key questions:

• What insights and guidance do In re Trados, In re John Q. Hammons Hotels, and other recent Delaware cases offer counsel advising corporate boards in which there are multiple classes of stockholders?
• How can directors and officers minimize liability for decisions made that benefit certain preferred stockholders at the expense of common shareholders?
• What strategies can counsel for directors and officers employ to defend against breach of fiduciary duty lawsuits?
• How can corporations avoid and defend derivative lawsuits arising from director and officer actions?

Webinar/Teleconference

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