OPINION

  Dear friends, I would like to say that winning in Delaware Courts has something to do with the truth, the merits, justice, or the law. In my view, It does not, so I can’t say it! I wrote some rules to guide future litigants: Rule 1) Perhaps be best friends and golfing buddies with the Judge, like Kevin Shannon? Rule 2) Be rich, be elite, and be country-club connected to the billionaire-boys club, perhaps like the Chancery Court Judges? Rule 3) Re-Read Rules 1) and 2) See this Reuters article below and smell what I consider the stench of the “Delaware Way” corruption, as attorney Kevin Shannon notches yet another remarkable against-all-odds win. God help us in Delaware if this form of justice continues. The only way this can ever be fixed is to change Delaware’s political leadership which I fervently advocate. Let me know your thoughts on this one, folks!   Respectfully Yours,   JUDSON Bennett-Coastal Network COASTALNETWORK.com  

Delaware court axes Baker Hughes shareholder claims over GE merger

By Maria Chutchian (Reuters) – A Delaware court on Tuesday threw out most of the claims brought by Baker Hughes Co shareholders asserting they were not given complete financial information about the oilfield service provider’s 2017 merger with General Electric’s oil and gas segment. In a 55-page decision, Chancellor Andre Bouchard of the Delaware Court of Chancery dismissed claims against GE, former Baker Hughes CEO Martin Craighead and the company’s former CFO, Kimberly Ross, accusing them of misleading shareholders about the $23 billion merger. He did, however, allow a claim that Craighead breached “disclosure duties” to stand. Lawyers for the shareholders, Frank Schirripa of Hach Rose Schirripa & Cheverie and Jeroen van Kwawegen of Bernstein Litowitz Berger & Grossmann, did not immediately respond to a request for comment. The shareholders had argued they should have received the unaudited financials that the board relied on in initially signing off on the deal as well as the audited financials that were later disclosed so they could compare the two before voting on the deal. The agreement included a provision whereby Baker Hughes could terminate the merger and receive a fee if it discovered material differences between the unaudited and audited financials. Bouchard wrote that the shareholders failed to support their claim that GE, by not ensuring that its unaudited financials were included in a proxy statement Baker Hughes distributed to shareholders, aided the board’s failure to disclose key information to the shareholders. The shareholders did not offer sufficient allegations that GE knowingly or otherwise participated in the board’s decision not to disclose the unaudited financials, he concluded. “Plaintiffs’ primary contention is that General Electric aided and abetted the Baker Hughes directors in breaching their duty of care by creating an informational vacuum that induced the board to enter a bad deal based on GE O&G’s unaudited financial statements,” Bouchard wrote. “This claim is not reasonably conceivable.” The shareholders filed two suits in 2019, which were eventually consolidated. In addition to their claims against GE, they accused the Baker Hughes board of breaching its fiduciary duty by entering the deal based on unaudited financial statements from GE. They later dropped those claims and instead focused on those against GE and the company’s CEO and CFO. In Tuesday’s decision, Bouchard found that the plaintiffs sufficiently alleged that the lack of unaudited financials to compare with audited financials in a proxy statement was a “material omission.” However, he deemed the allegations that Ross acted in bad faith or was grossly negligent with respect to the merger “exceedingly thin.” Bouchard did allow the same disclosure-related claim against Craighead to survive due to the shareholders’ allegation that he signed the proxy in question. The judge dismissed a breach of fiduciary duty claim against Ross and Craighead in its entirety, noting that a 12-member board of directors approved the merger and that the complaint does not allege that the two officers concealed audited financials from the board. “In effect, Plaintiffs’ grievance is that Craighead and Ross did not pound on the table vigorously enough to persuade twelve concededly independent and disinterested Board members to reach a different conclusion concerning the import of the Audited Financials. Plaintiffs cite no authority to support such a claim and the court is aware of none,” Bouchard wrote. The case is In re Baker Hughes Incorporated Merger Litigation, Court of Chancery of the State of Delaware, No. 2019-0638. For the shareholders: Ned Weinberger and Thomas Curry of Labaton Sucharow; Jeroen van Kwawegen, Edward Timlin, Alla Zayenchik and Gregory Varallo of Bernstein Litowitz Berger & Grossmann; Thomas Uebler, Joseph Christensen and Hayley Lenahan of McCollom D’Emilio Smith Uebler; and Frank Schirripa and Kurt Hunciker of Hach Rose Schirripa & Cheverie For Craighead and Ross: Kevin Shannon, Matthew Davis, and Callan Jackson of Potter Anderson & Corroon; and Samuel Cooper and Edward Han of Paul Hastings. For GE: Michael Kelly, Andrew Dupre and Sarah Delia of McCarter & English; and Alan Goudiss, Paula Howell Anderson and Grace Lee of Shearman & SterlingDelaware has a long history of housing corporations from all over the world. The state’s incorporation process, coupled with some distinct business advantages, makes it a haven for corporate entities. Citizens for a Pro Business Delaware seeks to inform the public of both the benefits of incorporating a business in Delaware, and its potential for corruption.

The Nationwide Incorporation Process

Incorporating a business means making it into a legal entity almost as if the business were a person. Incorporating your business provides a number of important advantages and protections including:

• Protection from liability for debts
• Continuity after the owner dies
• Ability to raise capital through the sale of securities
• Ease of transfer
• Establishes conditions for a company to become public

While every state has a different incorporation process, there are a few universal steps nationwide. Those steps include:

1. Choosing a business name
2. Naming an agent to act on your company’s behalf
3. Preparing your state’s articles of incorporation
4. Establishing bylaws
5. Continued compliance with state incorporation laws

Incorporating a Business in Delaware

Under United States’ business laws, you’re allowed to incorporate in whatever state you would like with one caveat: you must register your company in any additional state you wish to do business in. Delaware is considered the most popular state to incorporate your business in. The process is slightly different, however. Here are the steps to incorporate a Delaware business:

1. Choose your business type
2. Name a registered agent (must be located in the state)
3. Fill out certificate of incorporation
4. Obtain certificate in good standing (some financial institutions only)
5. Pay annual franchise tax

Why Do Businesses Choose Delaware?

The process for incorporation in Delaware is arguably easier.  The question becomes, “Why incorporate a Delaware business?” There are a few distinct advantages to having your company be a Delaware business. The primary advantage rests with the state’s tax laws. Those laws often favor corporations. If your business is incorporated but not physically located in Delaware, you don’t have to pay state income tax. Additionally, Delaware businesses offer a greater level of privacy as they don’t require you to disclose as much information about your business, such as the board of directors. Business law is a thriving industry in Delaware, which receives much of its state income from the incorporation process.

Potential for Corruption: Delaware Chancery Court

Another reason that companies decide to incorporate in Delaware is because of the Delaware Chancery Court. What might be considered an incredible advantage to some is actually a gateway to corruption. Delaware’s Chancery goes back centuries. Established in 1792, the Chancery Court is considered by some to be the most prestigious business court system in America. It is reliant on its system of judges, rather than juries, to oversee Delaware’s economic concerns. Because the incorporation process in Delaware requires such little information on the part of the incorporating company, and because of the legal, privacy, and tax protections placed on Delaware businesses, the Delaware Chancery Court is subject to a higher degree of potential corruption regarding business decisions.

Coastal Network

The Coastal Network is an outlet committed to providing a voice against corruption and advocating for transparency in the Delaware court system, business world and beyond. For more on corruption in the United States, including the Delaware Court system, visit www.coastalnetwork.comBelow is a shocking and disturbing publication that was placed in the News Journal, on Thursday July 27th by the Citizens for Pro Business Delaware group. They are fighting the forced dissolution and sale of TransPerfect by Chancellor Andre Bouchard. My sources tell me the ad was also published in the New York Law Journal. Basically, this significant advertisement clearly lays out, for all to see, what looks to be the specific and outrageous billing orchestrated by the Court-appointed Custodian, Robert Pincus, who is Chancellor Andre Bouchard’s former business partner. According to my reliable research, these grotesque expenditures are unnecessary and seemingly for the profit of Robert Pincus, his law firm, and his buddies at the expense and detriment of TransPerfect Global and its employees. Without itemization these unchecked bills are lumped together and paid by Court Order from TransPerfect’s coffers with the approval of Chancellor Andre Bouchard. The bottom line is, if this can happen because of the arbitrary and biased decision by a rogue and inexperienced Chancellor, who through his seemingly nefarious actions is destroying the credibility of Delaware’s esteemed equity court — the Delaware Court of Chancery — by illegitimately giving his buddies a small fortune, Delaware will indeed, and in time, lose its incorporation bonanza and 1/3 of its income. Shame on these people! It is an outrage for the courts to allow — much less condone such unchecked fee gouging — backscratching and cronyism for what looks to be pillaging of the bank accounts of a successful company.  I again call upon lawmakers to stop what’s happening, require itemized bills to be filed, and force these firms to reduce their rates and stop this outrageous gouging! As always your comments are welcome, SEE the amazing advertisement below:  

“CRITICS SAY DELAWARE’S BUSINESS COURT HAS GROWN TOO POWERFUL”

In this segment, which aired on Bloomberg Businessweek in September 2016, correspondents discuss the controversy surrounding the Delaware Court of Chancery’s ruling to dissolve TransPerfect in order to resolve a shareholder dispute.

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TransPerfect is a financially healthy company posting record revenues and profits despite the ongoing litigation in Delaware.  Chancellor Andre Bouchard’s decision was based on Section 226 of the Delaware Corporate Code.  The ruling was met with a massive response by TransPerfect employees who–unaware of any irreparable harm–continue to fight for the company’s survival.