Chancery Court Provides Guidance on Structuring Financings

In Zimmerman v. Crothall, the Delaware Court of Chancery, ruling on a motion for summary judgment, found that the defendants - directors and venture capital investors of Adhezion Biomedical - failed to establish that Adhezion's issuance of preferred equity and convertible debt to the defendants that was not offered to all holders on the same terms were not self-interested transactions.

SV Investment Partners, LLC v. ThoughtWorks, Inc.: Delaware Supreme Court Affirms Court of Chancery Decision Without Addressing Whether “Funds Legally Available” Is Equivalent to “Surplus”

In SV Investment Partners, LLC v. ThoughtWorks, Inc., the Delaware Supreme Court affirmed the Court of Chancery’s holding that a corporation did not have “funds legally available” to satisfy a preferred stockholder’s redemption demand, but determined that it did not need to address the Court of Chancery’s other holding that “funds legally available” is not equivalent to “surplus” under 8 Del. C. § 160.