Keith Paul Bishop discusses VC Laster's recent decision in Stream TV Networks v. SeeCubic, C.A. No. 2020-0310-JTL (Dec. 8, 2020):
On issue in the case was whether Section 271 of the Delaware General Corporation Law requires shareholder approval when an insolvent corporation transfers all or substantially all of its assets to its secured creditors. Vice Chancellor Laster ruled:
"Interpreting Section 271 to require a stockholder vote before an insolvent or failing corporation can transfer its assets to secured creditors would conflict with Section 272 of the DGCL, which authorizes a corporation to mortgage or pledge all of its assets without complying with Section 271."
As anyone familiar with Court of Chancery rulings, the Vice Chancellor has a lot more to say on the subject.
Keith concludes that California ought to interpret its corresponding statutes the same way.
