American LaFrance, LLC, founded in 1832 and one of the oldest fire and rescue vehicle manufacturers in the U.S., obtained confirmation of its chapter 11 plan on May 23, 2008 in the U.S. Bankruptcy Court for the District of Delaware. Ashby & Geddes served as Delaware counsel to the plan’s equity sponsor, as well as the agent to the senior prepetition, postpetition and exit financing lenders. The heavily negotiated plan was confirmed in fewer than 17 weeks after the petition date, with almost 90% of creditors voting to accept the plan.
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Ashby Named to Lawdragon List
Larry Ashby, a senior member of the firm’s Corporate Litigation and Counseling group, has been listed by Lawdragon Inc. and included on its selective lawyer search and ranking website. According to the Lawdragon website, “Lawdragon creates its guides to the best lawyers in the United States through a unique combination of online balloting and independent research”.
Ashby & Geddes Wins Important Delaware Chancery Court Decision Regarding Conduct of Board Elections
On January 15, 2008, the Court of Chancery issued an important decision in Portnoy v. Cryo-Cell Int’l., Inc., et al., C.A. No. 3142-VCS, in which Vice Chancellor Strine found that the “Management Slate” (including Cryo-Cell’s CEO and Cryo-Cell’s directors, all of whom were seeking election), breached their fiduciary duties by engaging in inequitable conduct in the course of a hard-fought proxy fight for control of Cryo-Cell. Specifically, the Court found that:
1. Cryo-Cell’s CEO, with at least the implied authority of the Cryo-Cell board, promised a dissident stockholder a second seat on the Cryo-Cell board (a seat not subject to election by the stockholders) if the dissident stockholder and his affiliates would, in the days leading up to the meeting, buy additional shares from stockholders that either had not voted or had voted for the insurgent’s slate—all without disclosing this arrangement to the Cryo-Cell stockholders.
2. Cryo-Cell, through its CEO, engaged in impermissible vote-buying by using corporate assets to coerce a large stockholder (“LS”) to vote for the Management Slate. Cryo-Cell was a 38% owner of LS, and the two companies were engaged in ongoing business relationships. When LS would not commit its vote to the Management Slate in the days leading up to the meeting, Cryo-Cell’s CEO was found to have coerced that vote by threatening LS with the loss, or at least a “cooling,” of a strategic relationship, and by inducing it through the lifting of a restrictive legend on the Cryo-Cell shares owned by LS (a request LS had repeatedly made over the course of several years).
3. Cryo-Cell’s CEO improperly prolonged the Annual Meeting by including unscheduled presentations and the ordering of a nearly three-hour lunch break solely for the purpose of allowing the 11th-hour completion of certain aspects of the Management Slate’s campaign to entrench themselves.
As a remedy for such conduct, the Court ordered that Cryo-Cell promptly convene a special meeting, presided over by a Court-appointed special master, and hold an election for directors to the Cryo-Cell board. Moreover, the Court ordered that the costs of holding the special meeting, including the costs of any campaign for re-election, must be borne by the members of the Management Slate.
This decision is significant for its discussion of the standards by which management’s conduct during a contest for election will be judged, and for its relatively rare finding that an incumbent slate had engaged in impermissible vote-buying. A team of Ashby & Geddes lawyers in the firm’s Corporate Litigation and Counseling practice group (Richard D. Heins, Philip Trainer, Jr., Carolyn S. Hake, Richard L. Renck, and Tiffany G. Lydon) represented Mr. Portnoy in this litigation. (Read opinion here.)
Ashby & Geddes Names New Directors and Associates
Richard L. Renck and Carolyn Hake named as Directors
Ashby & Geddes is pleased to announce that Carolyn Hake and Richard L. Renck have been made directors of the firm and that Karen Skomorucha and Toni-Ann Platia have become associates with the firm.
Carolyn Hake. Following her graduation from Widener Law School and the completion of her term as the Wolcott Law Clerk to The Honorable Randy J. Holland of the Delaware Supreme Court, Carolyn began her practice at Ashby & Geddes. Carolyn primarily represents business entities and individuals in corporate and commercial litigation in the Delaware Court of Chancery and in Delaware District Court. She has counseled and represented the firm’s clients in a broad range of corporate issues, including mergers and acquisitions and the fiduciary duties of directors and controlling stockholders.
Richard L. Renck. Following his term as a clerk for the Court of Chancery of the State of Delaware, Richard continued in private practice focusing on proceedings in the Court of Chancery arising under the provisions of the Delaware General Corporation Law. In recent years, Richard has represented companies and controlling stockholders, as well as directors in various proceedings in the Court of Chancery, including litigation involving corporate mergers and acquisitions and shareholder class and derivative actions. Richard has also advised special committees of directors, companies involved in proxy contests, and companies engaged in complex commercial litigation.
Karen B. Skomorucha. Karen is a graduate of American University and Washington College of Law and joined the firm’s Bankruptcy and Insolvency Practice following her clerkship with The Honorable Brendan Linehan Shannon in the United States Bankruptcy Court for the District of Delaware.
Toni-Ann Platia. Toni-Ann is a magna cum laude graduate of Widener University School of Law. Toni-Ann’s practice focuses on corporate and commercial litigation matters in the Court of Chancery of the State of Delaware.
Ashby & Geddes Team Obtains Key Decision On Appraisal Rights.
Resolving a long-running dispute about the scope of Delaware appraisal rights, the Court of Chancery ruled in favor of Ashby & Geddes’ clients when concluding that more than 8 million shares of stock held in a nominee’s name and acquired after the record date for a merger were entitled to appraisal without “tracing” the voting directions of prior beneficial owners. In reaching that conclusion, Chancellor William B. Chandler III agreed that Delaware law imposes no “tracing” requirement on appraisal petitioners acquiring stock after the record date but before the merger. See In re: Appraisal of Transkaryotic Therapies, Inc., Del. Ch., May 2, 2007 (read opinion here).
Ashby & Geddes Names New President.
Effective January 1, 2007, Steve Jenkins succeeded Larry Ashby as President of the firm. The change marks the completion of a management team transition that has been in the works for some time and now frees Larry to concentrate more fully on Ashby & Geddes’ corporate practice.
Judgment In Favor Of Ashby & Geddes’ Clients Affirmed Under Caremark Standard
Finding that defendants’ appeal was “without merit,” the Delaware Supreme Court recently affirmed a $25 million judgment in favor of Ashby & Geddes’ clients inATR-Kim Eng Financial Corporation v. Carlos R. Araneta, et al., C.A. No. 489-VCS (Del. Ch. 2006) — marking the first time that a Delaware director has been held liable under the teachings of In re: Caremark International(Del. Ch. 1996). Our clients’ victory also included an award of attorneys’ fees and expenses against the principal defendant, who was found to have controlled the subject corporation and all aspects of the underlying litigation. (READ DECISION HERE ).