Is this America? You have to wonder… when your Chief Chancellor Andre Bouchard is once again making a Stalin-like decision to dissolve a solvent company, rather than letting the private sector solve its own problem — which it would do, if the Court would stay out of it.
Equity-only courts, like the Chancery Court in Delaware, have been officially outlawed in 48 of 50 States! Only Delaware and Tennessee allow judges such unfettered power without the checks and balances of a jury.
It’s a court run by a man who appears to be absorbed by making companies spend and spend to solve simple problems. You appear to have deadlock here. Why not do what Delaware Supreme Court Justice Valihura demanded in the TransPerfect Global case, and expand the Board? In my view, the answer to “why not?” is because these decisions do not allow for Chancellor Bouchard to enrich his so called, elite, Delaware, lawyer friends and Skadden Arps buddies!!
Why would Bouchard do the equivalent of dropping a nuclear bomb on employees, their families, the U.S. Constitution and all business law precedence in America before his regime? The fly-swatter of an expanded Board can solve any deadlock, but where is the money for greedy Bouchard in something so simple? Bouchard’s pals would not profit from such simple American logic if it were applied here.
Simply put folks: Bouchard’s court, in my opinion, has turned into a money-making machine for his friends and cronies. How much money will be spent in the process? How much money could get funneled to all of his pals in the court-system?
We must rise up and stop this nefarious trend by a self- serving Judge who seems to be using the system for his own advantage? The Bar Association always has to go in front of him and plead their cases for his entire 12-year term, so they are beholden to obey Bouchard’s will. Folks, “the fox is guarding the hen house”! From my perspective, our elected General Assembly must step up for the people, reign in this-what I call-“business-terrorist jurist”, and restore the balance of power in our State before it is too late.
Instead, Bouchard’s solutions are un-American and insanely expensive. Bouchard has yet to explain any of the details or unseal the case where he ordered $250 million of TransPerfect’s money to be spent. The solution should be that Bouchard expands a company’s Board and lets the private sector make these decisions.
Instead, it is obvious to me and many others, he chooses to make the company “government controlled” — where he can make his cronies and good old boys richer and richer. He can pay back those who supported him to become Chancellor with no bench experience.
To me folks–It’s a crime, I see it plain as day, and it has to stop.
I pledge to talk to the employees of this recent company fiasco in Bouchard’s Court as well — just like TransPerfect — and give you honest reporting of any atrocities that Bouchard’s lackeys commit when he puts them in charge. According to employees, one woman at TransPerfect is still in therapy from the intimidation of Bouchard’s appointed Custodian and the fear of losing her job.
Folks, it is my absolute opinion, If the hubris of this inexperienced, petulant, greed-ridden, all-powerful Chancellor is not reigned in, Delaware’s image as once the #1 place for corporations — whatever is left of it and what’s left of Delaware’s economy — will be gone.
I implore you, my readers: Please call your elected state legislators, and tell them you will not stand, for what I consider, this corrupt behavior in our judiciary! IT IS GOING TO BE AN ISSUE IN THE 2020 ELECTION !
Please read the article below and any feedback you send me will be appreciated.
Here is the Law360 story:
Dysfunction Leads Del. Chancery To Dissolve Pharma Co.
By Vince Sullivan
Law360 (May 17, 2019, 7:03 PM EDT) — A Delaware Chancellor ordered the liquidation and dissolution of a pharmaceutical development company Friday, saying disagreements among the company’s three managers have created a deadlock that has frozen operations and doomed its future prospects.
Chancellor Andre G. Bouchard said Inspirion Delivery Sciences LLC cannot move forward because its operating agreement doesn’t provide a mechanism to resolve the differences facing members Stefan Aigner, Raymond DiFalco and Manish Shah, and there is no practical way for the business to continue.
“Underlying the rupture in their relationship, Aigner, DiFalco and Shah have been at loggerheads over issues of fundamental importance to the company and its future … ,” Chancellor Bouchard said in his opinion. “In sum, the current state of play at the company is that the board consists of three managers, two of whom disagree vehemently on issues critical to the company’s management and business strategy.”
The fissures began to show about two years ago, the opinion said, when Aigner, on one hand, and DiFalco and Shah, on the other, disagreed on supply contracts for the production of the company’s opioid abuse-prevention drug technology. The unique corporate governance structure required that Aigner and either DiFalco or Shah agree on corporate actions, but a dispute over DiFalco and Shah’s ownership of the company Inspirion contracted with to manufacture its drug led to the deadlock.
A series of acrimonious actions and reactions followed, with Aigner accused of trying to eliminate DiFalco’s veto rights using the conflict-of-interest provisions in the operating agreements, the opinion said.
Aigner filed suit in late 2018 seeking declarations that would cement his control of the company while limiting DiFalco’s management role, and DiFalco filed counterclaims seeking a dissolution of the company.
The agreement allows for the appointment of an independent representative to vote in DiFalco’s place when issues arise with supply contracts that implicate DiFalco’s other businesses, Chancellor Bouchard said. But DiFalco’s independent representative resigned in the fall of 2018, followed by Shah’s resignation, leaving just Aigner and DiFalco as voting members.
The opinion said the independent representative mechanism could work to resolve the differences between the two, but the chancellor determined it was highly likely the remaining managers would deadlock on the appointment of a replacement representative.
Even if there were a new representative selected or appointed by the court, the opinion said the mechanism is fatally flawed due to the ambiguous language in the operating agreement that gives no concrete definition of a conflict or when a manager would be required to disclose a conflict that would call the independent representative to the table to vote.
The deadlock has prevented Inspirion from selecting a contractor to manufacture its opioid abuse-prevention drug technology and has made it nearly impossible to monetize its valuable intellectual property, Chancellor Bouchard said.
“Under these circumstances, the court concludes that dissolution of the company is the best and only realistic option to force the parties to find a resolution where they have failed before, or if they cannot, to yield value for them by selling the company’s assets,” the opinion said.
William T. Reid IV of Reid Collins & Tsai, representing DiFalco, told Law360 Friday that the court’s decision will hopefully help in the development of new drugs to combat the opioid epidemic.
“This is an important victory for our client that will hopefully free up the technology so desperately needed to help those affected by the opioid epidemic,” Reid said. “We’re grateful that this court took the rare step of ordering a dissolution of the dysfunctional company.”
Representatives for Aigner did not immediately respond Friday to a request for comment.
Inspirion was formed in 2008 to develop drugs that would prevent the abuse of opioids by maintaining the time-release properties of opiate-based medications even after the pills were crushed and ingested, according to the opinion. It brought one such drug, MorphaBond, to market, and received regulatory approvals for a second drug, RoxyBond.
Aigner is represented by Peter B. Ladig and Brett M. McCartney of Bayard PA, and David H. Wollmuth and Michael C. Ledley of Wollmuth Maher & Deutsch LLP.
DiFalco is represented by Norman H. Monhait and Carmela P. Keener of Rosenthal Monhait & Goddess PA, and William T. Reid IV, Michael Yoder, Jordan L. Vimont and Ryan M. Goldstein of Reid Collins & Tsai LLP.
The case is Acela Investments LLC et al. v. Raymond DiFalco et al., case number 2018-0558, in the Court of Chancery of the State of Delaware.
–Editing by Jack Karp.