Articles Posted in Directors

Shareholder Deadlock AttorneyIs an intractable deadlock among the shareholders good grounds to force the sale of a large, successful corporation? That was the issue before the Delaware Supreme Court in a case in which the trial court’s decision to sell the business as a going concern – over the objection of one shareholder –was affirmed by the Supreme Court.

In this case, a trial court’s ability to fashion and equitable remedy based on the circumstances of the case ran into direct conflict with the limited remedies that are available to minority shareholders under Delaware law.

Court Orders Sale of Corporation in Shareholder Deadlock

Indemnification legal fees attorney | lawyer
The potential liability of a director for attorney’s fees is what determines whether recoverable litigation expenses are due under the indemnification provisions of Delaware law, the Chancery Court holds.


The expenses at issue were incurred in litigation that wound its way through state and federal courts in Illinois for nearly a decade, including a bankruptcy. The Plaintiff in Dore v. Sweports, Ltd, C.A. No. 10513-VCL (Del. Chancery January 31, 2017) was a former director and investor in Sweports, who was ousted in a dispute with the other directors and locked out of the business. A significant component in the lawsuit involved the services of the law firm that was general counsel and also represented the plaintiff in some of the underlying litigation.

Court Awards Expenses Incurred Under Oral Agreement to Defend Counterclaims by Corporation Against Former Director

Oppressed Minority Shareholder Attorney

You just learned that an employee secretly formed and operated a competing business while employed by you.  Is there a claim against the competing business or just the employee? Most likely there are viable claims against both.  The fiduciary duties of the employee are likely to be imputed to the company he or she formed.

Breach of Fiduciary Duties

Similar facts were before the court recently in an unfair competition and breach of fiduciary duty case, Vibra-Tech Engineers, Inc. v. Kavalek, Civil Action No.: 08-cv-2646, in the United District Court for the District of New Jersey. (opinion here) A vice president and director of Vibra-Tech, along with his wife, formed two businesses.  One of the businesses sold equipment to Vibra-Tech; the other competed directly for the same customers.  Vibra-Tech, of course, had no idea that one of their executives was involved in the two businesses.

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