Delaware Legislature Must Act
On Friday, June 17, 2016, reporterJeff Mordock wrote an article in the Wilmington News Journal about the controversial TransPerfect Global case which is before the Delaware Court of Chancery (which I have been writing about), whereby Chief Chancellor Andre Bouchard, ordered the sale of this extremely profitable company, siding with the Plaintiff, Elizabeth Elting (who appears to be spiteful, vindictive, and acutely unreasonable, from the court documents and pleadings I have read) over defendant Phillip Shawe who appears to love his company, cares about his employees, and has led the company successfully through his brilliant creativity and hard work. Shawe does not want the company sold and Elting does. Shawe has offered Elting more than what her share is worth, however she only wants to hurt Shawe by refusing to negotiate in good faith.
The Chancellor in the wake of obvious cronyism and the appearance of personal improprieties has made an arbitrary and capricious ruling, although certainly within his legal right, which is clearly inequitable and does not represent the greater good. Although, reporter Mordock was somewhat thorough in his article, his reporting was typical drive by media reporting (sensationalizing the fact that Elting and Shawe once had an amorous relationship) while missing what is most important, the fact that the company is being forced to be sold and 4000 well- paying jobs could be lost.
Murdock further misses the boat here in that the American dream is being dashed because one of the owners appears to be willing “to cut off her nose to spite her face,” with total disregard for her employees’ well-being. On the other hand Phillip Shawe wants to maintain the company that he created and nurtured to where it nets over $500 million dollars per year.
The article mentioned the legislation sponsored by Senator Colin Bonini (R) in the Delaware Senate to prevent the sale of company’s like TransPerfect, however Mordock only interviewed the detractors and not the proponents portraying a negative bent on the whole issue. Although reporting on the real possibility that this decision in the Chancery Court could hurt Delaware’s profitable corporate franchise which brings in millions into its coffers if future entrepreneurs start incorporating in Nevada or Rhode Island instead of Delaware, Mordock has clearly missed the boat on the real essence of this important issue.
Intentional Disregard or Collusion?
This brings me to the disappointment I have in Senate Minority Leader, Gary Simpson (R), and House Minority Leader Dan Short(R) who oppose the legislation. I am surprised that they don’t get it.
In the News Journal article Mordock quotes Simpson who says, “He hasn’t received any e-mails about it”. Hello Senator-you are on my vast e-mail list and have received e-mails about it. Simpson further states, “We have a reputation in Delaware for having a Chancery Court where litigants and their attorneys know how Delaware law reads. To give uncertainty because a party may be able to persuade the Delaware Legislature to change things is just bad.” I vehemently disagree. Regardless of this reputation, when something is wrong, it’s wrong and if it is wrong, it needs to be changed. Delaware’s Chancery Court reputation and corporate franchise situation will be tainted by Chancellor Bouchard’s ruling and the law needs to be corrected to prevent this kind of hard core decision from being implemented.
Likewise, Representative Dan Short is quoted by Mordock as saying, “ The company’s dysfunction is the result of its own lack of corporate governance to resolve a bitter dispute between its leaders. The Chancery Court is using the tools available to it under Delaware law to untangle a knot TransPerfect tied for itself.” Again I disagree whole heartedly. Who said the court is responsible for untying a knot it never made. If Ms. Elting is unhappy there was nothing to stop her from selling her shares on the open market and there is still nothing stopping her today. Instead, it appears she consciously manufactured deadlock to use the court in an attempt to get a higher price than the market is willing to pay.
The law needs to be changed to prevent a litigant from using false and questionable evidence to manipulate the court. The judge in New York threw out her case; why didn’t Bouchard? Who clearly benefits by not settling? Certainly not Phillip Shawe!
The Truth that Media is Missing
The company is not dysfunctional, and although there was no agreement in place between the two owners to resolve disputes, there are more reasonable options available to the Court in lieu of selling a very well working company. Just because the Chancellor has the authority “to kill the goose that laid the golden egg”, doesn’t mean he has to do it. Elting is using the court and Bouchard has either fallen for it or is subconsciously working to help his buddies involved (the law firm, the custodian who spends $5 million each year of TransPerfect money, etc.)
The proposed law change makes sense. The problem here is, even though I respect Gary Simpson and Dan Short and consider them friends, they appear to have become “Establishment Politicians”. The entire Delaware Legislature should go to school on the amazing phenomenon of Donald Trump ( a bombastic, politically incorrect egocentric) and Bernie Sanders (a passionate Socialist) who both are resonating with millions of voters. People are hurting and they are sick of the “Status Quo” of the “Political Establishment” on both sides of the isle. Delaware is not exactly booming with a great economy or positive economic growth. This Chancery Court ruling by Andre Bouchard and rulings like it will only tend to hurt the State of Delaware economically. The law needs to be changed in this legislative session and there is a realistic bill on the table to do so. Delaware voters are watching and they are very frustrated. The election is coming up in November.
As always your comments are welcome and subject to being forwarded.
Judson Bennett-Coastal Network