I had occasion today to be working on a project involving Katz v. Bregman, 431 A.2d 1274 (1981). As informed readers will now, of course, in it Plant Industries sold off a series of unprofitable divisions. When it proposed to sell one of its principal remaining subsidiaries, however, a shareholder sued claiming the transaction would entail a sale of all or substantially all the remaining assets. Through its various subsidiaries, the company had been in the business of manufacturing steel storage and shipping drums. Using the proceeds of its various sales, the company planned to go into the business of manufacturing plastic shipping and storage drums.
The legal issue presented was whether the transaction constituted a sale of substantially all Plant Industries’ assets, such that shareholder approval was required under DGCL § 271(a). In assessing whether shareholder approval was required, the Chancellor began with quantitative metrics. The subsidiary to be sold represented 51% of the firm’s remaining assets, which generated 44.9% of total revenues and 52.4% of pre-tax earnings. Turning to qualitative measures, the court opined that the planned switch from steel to plastic drums would be “a radical departure,” by which the corporation would sell off the core part of the business in order to go into an entirely new line of business. Taken together, the nature of the transaction, plus the fairly high percentage of assets being sold, satisfied the “all or substantially all” standard and shareholder approval therefore was required.
Here's the part that caught my eye. The court noted in passing that “in the case of Wingate v. Bercut (C.A. 9) 146 F.2d 725 (1945), in which the Court declined to apply the provisions of 8 Del.C. § 271, it was noted that the transfer of shares of stock there involved, being a dealing in securities, constituted an ordinary business transaction.” Should a sale of stock be treated any differently than a sale of any other asset?
There’s no obvious reason that a sale of stock should be treated differently than a sale of any other asset. Suppose Holding Corp. has three unincorporated divisions: Alpha (80% of Holding’s assets), Beta (10%), and Charlie (%%), with 5% consisting of headquarters assets. If Holding sells all of the assets of Alpha to a buyer, it is likely to be deemed a sale of substantially all Holding’s assets. Why should the answer change if the subsidiaries were separately incorporated and Holding sold all of the stock of Alpha?
Wingate is properly understood as holding that the stock in question, “although a principal asset of the Holding Company, was not ‘all its property and assets, including its good-will and corporate franchises’”[1] on the facts of the specific case before it. It should not be understood as holding that sales of stock are somehow qualitatively different than sales of other assets.
[1] Wingate v. Bercut, 146 F.2d 725, 729 (9th Cir. 1944) (quoting the lower court decision).
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over medium heat. Add 1 tablespoon olive oil, swirl, and then add ½ cup minced onions and a pinch of salt. Sauté about 10 minutes or until translucent and softened but not browned.
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and add a heavy pinch of saffron threads to the tomatoes to steep.
, I made a batch of whole wheat fettuccine using the 
to my 
. I also turned two small zucchini into noodles using the medium size cutter on the 
. I brought a large pot of generously salted water to a boil and then cooked the pasta for 5 minutes. After the pasta had cooked for 2 minutes, I added the zucchini. When they were done, I drained the pasta in a colander and returned it to the pan.
in a strainer set over a bowl. In a small pan I heated half a jar of 
to which I added 1 tablespoon shredded Parmesan cheese, 1 teaspoon dried parsley flakes, 1 teaspoon freeze-dried chives, and a tablespoon of the reserved olive oil drained off the tuna. Once the sauce had warmed, I added the tuna, mixed it well, and turned off the heat.
