Mergers & Acquisitions

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Holland & Knight LLP

Chauncey Lane

Executive Editor, Mergers & Acquisitions
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Domestic M&A

Delaware Supreme Court reverses Delaware Chancery Court by concluding no insolvency exception exists to the common law rule requiring shareholder approval to sell all or substantially all assets of a corporation.

By Chauncey Lane, Partner, Holland & Knight LLP

In Stream TV Networks, Inc. v. SeeCubic, Inc., the Delaware Supreme Court reversed the Delaware Chancery Court’s finding that the board of Stream TV Networks, Inc. (Stream) could sell all of Stream’s assets without a stockholder vote due to Stream’s insolvency. The Delaware Supreme Court found that the sale agreement constituted an “asset transfer” under Stream’s charter, triggering a class vote provision that required the approval of Stream’s Class B stockholders. The court further held that a “board only” insolvency exception no longer existed following the enactment of Delaware General Corporation Law (DGCL) § 271 and its predecessor governing the sale of a corporation’s assets.

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