D&O Fiduciary Duties to Multiple Classes of Stockholders

Lessons From In re Trados Inc. and Other Recent Delaware Decisions

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, January 27, 2010

Recorded event now available

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Program Materials

This CLE webinar will examine In re Trados, In re John Q. Hammons Hotels, and other recent Delaware cases and their implications for directors and officers. The panel will discuss fiduciary duties owed to multiple shareholders and offer strategies to minimize the risk of breach of fiduciary duty lawsuits.

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.

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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?

Faculty

Trevor Norwitz
Trevor Norwitz

Partner
Wachtell Lipton Rosen & Katz

He focuses primarily on mergers and acquisitions, corporate governance and securities law matters. He has advised a...  |  Read More

Mark A. Morton
Mark A. Morton

Partner
Potter Anderson & Corroon

His practice involves corporate counseling, governance and opinion work. He advises clients regarding the Delaware...  |  Read More

Michael D. DiSanto
Michael D. DiSanto

Partner
Reed Smith

He counsels clients on a broad range of corporate and securities law matters, including formation, initial...  |  Read More

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