Chancellor Bouchard’s Judgement Could Prove Costly for Delaware!
Folks, beyond destroying, in my opinion, Delaware’s reputation for business, Chancellor Andre Bouchard may cost Delaware plenty of cold hard cash. Like I said back in February, Delaware’s Chancery Court’s Chancellor Andre Bouchard has put himself squarely in the crosshairs of Shirley Shawe who owns 1% of TransPerfect. While it would appear that her shares are only 1/100th of the company’s value, this does take into account that she is the swing vote!
Therefore, her share isn’t worth 1/100th, but more like 20 percent of the value of the firm. Think about it this way, Elting should have had to pay Shirley Shawe to get the vote required for a sale, which experts may value as high as $50 million. But Chancellor Bouchard, by wanting to give all of Shirley’s value to Elting and his 20-year buddy, Kevin Shannon of Potter Anderson for free, has forced the sale of the whole company, per Shannon’s request.
Putting aside that the “public use” requirement is not met, the State of Delaware also has a “just compensation” requirement. Delaware is responsible for transferring “market value” to the owner at the time of any “taking”, if this taking is deemed legal — so I logically believe Delaware tax payers will likely have to pay at the very least another $30 million plus to Ms. Shawe. The moment Bouchard steals her share against her will, she will undoubted file what is known as a “just compensation” case and it can be easily proven (I’m told by legal experts) that Shirley’s “swing vote” is worth 10- to 20-times what a normal share would be. I’m also told by folks close to the case that it is open and shut.
If Bouchard operated in the real world of honest business people, Elting would have to pay Ms. Shawe somewhere around $50 million to $100 million for her share to get the control premium and dictate the exit strategy. In my view Chancellor Bouchard is robbing this 76-year-old retired mother of an absolute fortune! If this is proven, Delaware tax payers will then have to pay for his mistake!!!
Think about it this way… if Shirley Shawe sues and wins, Delaware tax payers will owe her not her 1% stake, because that is not the value of the swing vote, Delawareans will have to pay 10% to 20% of the value of this company. And, for what? Why should Delaware tax payers have to pay for the arbitrary and capricious actions of a rogue judge?
Bouchard is not only responsible for dropping us from #1 to #11 in the minds of corporate America, but mark my words, he also could cost our state millions of dollars for jilting Ms. Shawe! The press will have a field day writing about Bouchard’s age-discrimination against this female senior citizen (as well they should!). Folks, this assumes everything is on the up and up — but we all know better. In short and in my opinion, Bouchard is a horror show, and Delaware is buying tickets for everyone to watch. The problem is the tickets are extremely expensive!!!
If TransPerfect co-CEO Elizabeth Elting wanted to take control of the company and sell it, she could have paid Ms.Shawe for her stake and taken control. Instead, she found a lawyer who was Chancellor Andre Bouchard’s buddy who was able to convince him to rule in her favor in an unprecedented illegitimate “taking” based on no evidence. Delaware may be on the hook to pay the price if Ms. Shawe sues and wins. I again call upon the General Assembly to pass SB-53 and restore integrity to our judiciary!
See the story below which discusses Bouchard’s approved fleecing of TransPerfect’s coffers which has the appearance of nothing more than payola to his friends. It is hurting Delaware’s reputation and economic future. It must be stopped and respect and confidence restored to the Delaware judiciary.
As always your comments are welcome.
JUDSON Bennett-Coastal Network
By Matt Chiappardi
Law360, Wilmington (October 2, 2017, 8:53 PM EDT) — Shirley Shawe, mother of one of the co-founders warring over control of the legal translation firm TransPerfect, launched a books and records demand to investigate the $21 million expense bill for the custodian appointed by the Delaware Chancery Court to sell the company.
The lawsuit is another chapter in the ongoing saga of the business divorce between TransPerfect co-founders Philip Shawe and Elizabeth Elting. Chancellor Andre G. Bouchard ordered TransPerfect sold under court supervision in 2015 to break bitter infighting and a deadlock between the pair that the chancellor said threatened the profitable company’s financial future.
Philip and Shirley Shawe have both staunchly opposed the decision, and in her records demand Shirley Shawe, a 1 percent shareholder in the company, is seeking to investigate “potential wrongdoing, mismanagement and corporate waste” connected to the custodian stemming from what she claims is “a lack of any meaningful oversight” over his invoices.
Shirley Shawe claims the custodian, Robert B. Pincus of Skadden Arps Slate Meagher & Flom LLP, refuses to provide detailed invoices for his or his law firm’s time spent as custodian over the TransPerfect sale process, and has provided the court with contradictory reasons why, as well as falsely claimed that no group has raised objections or made allegations of abuse of discretion.
“The custodian’s steadfast refusal to provide the requested information in spite of the extraordinary costs being incurred, and the attempts to prevent disclosure of the information, including through his counsel’s incorrect statements to the court, presents more than ‘some evidence’ to suggest a ‘credible basis’ for at least the following potential wrongdoing: mismanagement and corporate waste by the directors and officers of the company, related to, at least, a lack of any meaningful oversight of the invoices being paid vis-à-vis the services being rendered,” Shirley Shawe said in the demand.
Philip Shawe told Law360 in an emailed statement Monday that Pincus would not allow any transparency into his “enormously large” itemized bills.
“To my mother and I there is nothing more disheartening than seeing the court-sanctioned looting of our company,” Philip Shawe said. “The combined cost to the company and the parties, of the legal and custodian-related fees in front of Chancellor Bouchard, have now surpassed the $150 million mark. In my view, this provides the perverse motivations and incentives that driven the whole Delaware process.”
Pincus and his counsel did not immediately respond to requests for comment Monday.
Under Delaware law, shareholders can seek to have the Chancery Court compel a company to hand over records if they can show a “proper purpose” for doing so, usually to investigate a credible suspicion of wrongdoing.
Shirley Shawe’s demand is the latest in a long line of court actions in multiple forums she and her son have filed after Chancellor Bouchard’s 2015 sale order, which was affirmed by the Delaware Supreme Court in a 4-1 decision.
U.S. District Judge Gregory M. Sleet last week threw out a lawsuit Philip Shawe filed in Delaware federal court claiming the sale order violated due process and the takings clause in the U.S. Constitution, ruling it was an improper attempt to appeal a state court’s decision.
The younger Shawe also sued Pincus in New York federal court, claiming the custodian was trying obtain authority to restrict him from the sale process.
Shirley Shawe had filed a Chancery lawsuit to force a TransPerfect stockholder meeting where she said she would break the deadlock by voting her 1 percent stake with Elting’s 50 percent stake to Philip Shawe’s 49 percent.
Elting had refused the overture because of what she said were strings attached that would alter the structure of TransPerfect’s board, and Chancellor Bouchard ruled any such meeting would be futile.
Shirley Shawe’s bid for interlocutory appeal was denied by both Chancellor Bouchard and the Delaware Supreme Court.
Elting and Philip Shawe have been locked in a very public battle over TransPerfect since at least 2014, when Elting petitioned the Chancery Court to break their deadlock.
The pair founded the company in a New York University dorm room roughly 25 years ago and grew it into a global powerhouse that takes in hundreds of millions of dollars in revenue annually. The two were once engaged to be married, before breaking off romantic ties in the late 1990s.
They remained business partners until a spectacular falling out that resulted in a tangle of messy litigation and accusations, some deeply personal.
Shirley Shawe is represented by Jeremy D. Eicher of Eicher Law LLC.
Pincus is represented as custodian by Jennifer C. Voss of Skadden Arps Slate Meagher & Flom LLP.
The new case is Shawe v. TransPerfect Global Inc., case number 2017-0679, in the Delaware Court of Chancery.
The other Chancery cases are In re: TransPerfect Global Inc., case numbers 9661, 9686 and 9700, and Shirley Shawe v. TransPerfect Global Inc., case number 2017-0306.
The Delaware federal case is Shawe et al. v. Pincus et al., case number 1:17-cv-00277, in the U.S. District Court for the District of Delaware.
The New York federal case is Shawe v. Pincus, case number 1:17-cv-06673, in the U.S. District Court for the Southern District of New York.
–Additional reporting by Ryan Boysen, Jeff Montgomery and Chelsea Naso. Editing by Marygrace Murphy.
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