Insights Archive

This article discusses the bankruptcy discharge process and how prospective acquirors of bankrupt companies can identify and potentially avoid liability for legacy unclaimed property liabilities that may remain following confirmation of a plan of reorganization.

The Delaware Secretary of State announced in late August 2020 that his office was mailing nearly 200 letters to businesses identified as “holders” of unclaimed property. These Delaware-formed companies were deemed likely to be out of compliance in reporting dormant, abandoned or unclaimed property under Delaware law.

Through the years, alternative entities have evolved in complexity and grown in popularity, particularly limited partnerships (“LPs”) and limited liability companies (“LLCs”).  Morris Nichols attorneys Don Parsons, Jason Russell and Koah Doud contributed a look-back article on alternative entities to the 75th Anniversary edition of The Business Lawyer.

The U.S. District Court for the District of Delaware issued Jury Trial Restart Guidelines today providing direction to litigants “in framing pre-trial discussions that will be required in order to conduct jury trials in a manner that protects health and safety as well as litigants’ rights” during the COVID-19 pandemic.

In its 2020 session, the Delaware legislature passed a number of amendments to the Delaware General Corporation Law and the Delaware “alternative entity” statutes—the Delaware Limited Liability Company Act, the Delaware Revised Uniform Limited Partnership Act, the Delaware Revised Uniform Partnership Act and the Delaware Statutory Trust Act.

Delaware Governor John C. Carney has signed House Bill 334 into law (“Trust Act 2020”), which further improves upon Delaware trust law. 

The U.S. District Court for the District of Delaware modified its COVID-19 standing order today. The new order continued all civil and criminal jury selections and jury trials scheduled to begin before September 15, 2020.

Morris Nichols attorneys Eric Klinger-Wilensky and Melissa DiVincenzo published three guides on Delaware public benefit corporations for Practical Law Corporate & Securities. 

The Delaware Supreme Court recently decided the case of Murfey v. WHC Ventures, LLC, No. 294, 2019 (Del. July 13, 2020), which involved a dispute over whether the plaintiff limited partners were entitled to certain books and records under the partnership agreement in question.

Earlier this month, the Delaware Court of Chancery issued an opinion in Department of Finance v. AT&T, Inc., C.A. No. 2019-0985-JTL (Del. Ch., July 10, 2020). The opinion itself is narrow in scope but its result, and several of its findings regarding Delaware’s administration of its unclaimed property program, should be assessed carefully by holders and their advocates. The opinion may impact pending or new audits in two important ways.

The U.S. District Court for the District of Delaware modified its COVID-19 standing order today by continuing all civil and criminal jury selections and jury trials scheduled to begin before August 31, 2020. Jury proceedings affected by the Order will be reset by further order of the assigned judge.

On June 18, 2020, the administrators of Delaware’s unclaimed property program sent letters to companies who failed to respond to a February 2020 invitation to enroll in the Delaware Secretary of State's voluntary disclosure agreement (“VDA”) program establishing July 18, 2020 as the final date to enter the voluntary program prior to being placed under audit by the Department of Finance.

The U.S. District Court for the District of Delaware issued Re-Opening Guidelines today, describing a four-phase reopening and providing policies to be followed at each stage.

The U.S. District Court for the District of Delaware modified its COVID-19 standing order today. Although the Court remains open, all jury trials scheduled to begin before June 30, 2020, are continued under the revised order. Jury proceedings affected by the order will be reset by further order of the assigned judge.

On May 21, 2020, the Delaware Court of Chancery issued an opinion in Univar denying a holder’s ripeness challenge to an administrative subpoena for documents issued by the Delaware Department of Finance pursuant to the amended provisions of the State’s abandoned and unclaimed property law.

The first quarter of 2020 has brought interesting Delaware law developments for private, venture-backed companies. As is often the case, arising issues for companies in the venture capital and private equity space have had a different emphasis from the public company area. While public companies may be considering issues such as “virtual” stockholder meetings, delayed dividends and MACs in merger agreements, we have identified five main Delaware law highlights below in the VC/PE space.

For Delaware, the legal home to thousands of “holders,” collection of, and fiscal reliance on, unclaimed property has always been tricky.

One of the many significant developments in the field of trust lawover the past decade has been the increasing popularity of so called “silent trusts”. The term “silent trust” generally describes an arrangement in which a trustee is prohibited under the terms of a governing instrument from providing information to the trust’s beneficiaries, or where the trustee is relieved from its common law duty to provide information to beneficiaries, so that information is only shared when it’s deemed appropriate.

Morris Nichols attorneys Todd Flubacher and J. Zachary Haupt authored three guides on Delaware law for Practical Law. Their Delaware Estate Tax Q&A guide addresses whether a jurisdiction has any estate tax or other similar taxes imposed at death and, for jurisdictions currently imposing a state estate tax.

The U.S. District Court for the District of Delaware modified its COVID-19 standing order today. Although the Court remains open, all jury trials scheduled to begin before May 31, 2020, are continued under the revised order. Jury proceedings affected by the order will be reset by further order of the assigned judge.

As COVID-19 continues to affect the legal community and the world in various ways, Delaware courts and state agencies have issued orders concerning COVID-19 measures. Here, we have consolidated key Delaware law resources on the unfolding situation. Our attorneys are committed to serving our clients through this challenging time.

In light of the health risks posed by COVID-19, on April 6, 2020, Delaware Governor John C. Carney issued a modification of Delaware’s state of emergency first declared on March 12, 2020, to provide some flexibility to Delaware public corporations that have already sent notice of meetings to be held at a physical location.

On February 20, 2020, Delaware’s VDA Administrator mailed invitations to enter into the State’s Abandoned and Unclaimed Property Voluntary Disclosure Agreement Program (“VDA Program”) to more than 100 companies identified as likely being out of compliance with Delaware’s Unclaimed Property Laws. By statute, an invitee has 60 days from the invitation’s mailing to enroll in the VDA Program or the company will be referred to the State Escheator for audit.

“It costs a lot of money to go broke. In the case of a chapter 11 bankruptcy, the cost includes quarterly fees payable to the Office of the United States Trustee (the “UST”), a component of the Department of Justice that oversees bankruptcy cases.

The Delaware Supreme Court issued an important opinion holding that federal forum selection provisions adopted by Delaware corporations requiring that stockholders file actions arising under the Securities Act of 1933 (1933 Act) in federal court - and not state court - are facially valid.

In an Order issued Saturday, March 21, 2020, the U.S. District Court for the District of Delaware announced that it would reopen the J. Caleb Boggs Courthouse and Federal Building on Monday, March 23, 2020, at 8:00 a.m. Per the Order, “[a] thorough deep-cleaning of the affected areas was performed this weekend.”

As we collectively respond to the Coronavirus (COVID-19) outbreak in our country, many have turned their attention to completing estate planning documents. Because clients, especially seniors, are socially-isolated and unable to obtain witnesses and notarization of signatures, we have been fielding numerous questions about the legal requirements for validly executing Delaware trust agreements.

COVID-19’s disruption to the economy has prompted a number of questions from Delaware corporations about their ability to preserve capital if they have already declared a cash dividend.  This memo, released jointly by the Delaware firms listed at the bottom, addresses some of the issues a board of a Delaware corporation might consider in such circumstances.

Effective immediately, the U.S. District Court for the District of Delaware is closing the J. Caleb Boggs U.S. Courthouse and Federal Building until further notice.

On March 16, 2020, the United States Bankruptcy Court for the District of Delaware implemented a General Order in response to the outbreak of COVID-19.  As part of our effort to help our clients and friends navigate this challenging time, the Morris Nichols Business Reorganization & Restructuring Group has summarized this important announcement from the Delaware Bankruptcy Court.

The U.S. District Court for the District of Delaware remains open during the coronavirus outbreak, but the Court issued a new Standing Order today continuing jury selections and jury trials scheduled to begin before April 30, 2020. Jury proceedings affected by the Order will be reset by further order of the assigned judge.

The U.S. District Court for the District of Delaware remains open during the coronavirus outbreak, but has implemented procedures to restrict access to the courthouse and protect Court personnel, attorneys, and litigants.

The State of Delaware’s unclaimed property program faces continued legal challenges from the holder community.  In December 2019 alone, four new holders filed complaints in the U.S. District Court for the District of Delaware raising a series of constitutional challenges to Delaware’s conduct of its unclaimed property audits. 

The American Bar Association (“ABA”) Business Law Section has published a new resource for M&A transaction planners entitled, The Model Tender Offer Agreement. Morris Nichols partner Eric S. Klinger-Wilensky co-edited the book with Michael G. O’Bryan of Morrison & Foerster LLP.

The dominance of Delaware in entity formations, especially corporations, is well known. But why is this the case, what goes into making - and keeping - the “Delaware Brand?”

Morris Nichols partners Robert J. Dehney and Matthew B. Harvey co-authored a book chapter, “Seeing the Future: The Case of Seegrid Corporation” in Global Restructuring Review’s new book The Art of the Pre-Pack.

Morris Nichols partners Lou Hering, David Harris, and Jason Russell are coauthors of the Bloomberg BNA Corporate Practices Series Portfolio, Limited Liability Companies: Legal Aspects of Organization, Operation, and Dissolution. Morris Nichols attorneys Sean Sullivan and Melanie Young are also acknowledged for their significant contributions.

In its 2019 session, the Delaware legislature passed a number of amendments to the Delaware General Corporation Law and the Delaware “alternative entity” statutes - the Delaware Limited Liability Company Act, the Delaware Revised Uniform Limited Partnership Act, and the Delaware Revised Uniform Partnership Act.

In June, Delaware enacted its latest installment of annual trust legislation. Trust Act 2019 includes many revisions and clarifications, but two new statutes, Sections 3343 and 3344 of Title 12 of the Delaware Code, represent material advancements in the law.

The DLLCA is amended annually to ensure that it is the preeminent statute governing LLCs and to ensure that the DLLCA addresses the needs of practitioners and persons using the LLC form, including the needs of M&A practitioners.  The amendments that took effect on August 1, 2019 provide for creation of “registered series” (Amendments), among other things.

The U.S. District Court for the District of Delaware continues to consider the best allocation of judicial resources now that it has a full complement of four District Court Judges and four Magistrate Judges, following the swearing in of new U.S. Magistrate Judge Jennifer L. Hall.

Delaware Governor John C. Carney has signed House Bill 72 into law (“Trust Act 2019”).  The legislation further improves and modernizes Delaware trust law.

Congress designed Chapter 11 to be flexible to promote the twin goals of rehabilitating distressed businesses and maximizing stakeholder returns. Several recent decisions from the U.S. Bankruptcy Court and District Court for the District of Delaware highlight how Chapter 11’s inherent flexibility promotes these goals.

On Monday, May 20th, the Delaware Secretary of State issued a notice announcing that the State will distribute letters this week inviting companies to enter the Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program (“VDA Program”).  This is a continuation of the State’s heightened enforcement initiative that we highlighted earlier this year.  We believe this round of invitations will be targeted at privately held Delaware incorporated companies with an apparent history of little or no prior reporting of unclaimed property to Delaware.

The American Bar Association Business Law Section has published a new book titled, The Role of Directors in M&A Transactions: A Governance Handbook for Directors, Management and Advisors. Morris Nichols partner Patricia O. Vella is one of four editors of the Handbook that gives directors, management, and legal and financial advisors a framework for providing effective oversight of merger and acquisition deals.

The U.S. Supreme Court will soon render a decision that could have a significant impact on the manner in which some states tax income accumulated in nongrantor trusts.

If approved by the legislature and signed by the Governor, the amendments will become effective on August 1, 2019.

For those who thought the State of Delaware had gone out of the unclaimed property business - think again. After a 2017 overhaul of Delaware’s unclaimed property laws and an increased emphasis on voluntary compliance with those laws, Delaware is sending out dozens of “invitations” to companies to enter its Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program (the “VDA Program”).

In recent years, many states have enacted pre-mortem validation statutes enabling testators or settlors to take proactive steps to avoid will or trust contests.

On February 28, 2019, the United States District Court for the District of Delaware announced the selection of Jennifer L. Hall to fill a newly created fourth Magistrate Judge position on the Court.  When Ms. Hall joins the bench, the District of Delaware will have four magistrate judges to serve alongside the Court’s four district court judges.