Here’s a quick update, folks, on the Delaware front, regarding Delaware Governor John Carney. There are 1,000 TransPerfect employees requesting the relationship between Chancellor Andre Bouchard and law firm Skadden Arps be investigated. I have one question, what has taken so long?
It’s time for Governor John Carney to take a leadership role and clean up our shameful old boy’s club in Delaware. As I see it, folks, this case, and this court-ordered looting is a sham that hurts workers and hurts Delaware, and it has gone on long enough!!
Please read the article below, and let me know your thoughts.
By TransPerfect
On April 14, 2020
Wilmington, DE – Today, a letter co-signed by more than 1,000 TransPerfect Global, Inc. employees was sent to Delaware Governor John Carney, demanding an inquiry into the close, mutually-beneficial relationship between Delaware’s beleaguered Court of Chancery and the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.
The letter comes following several recent motions filed by TransPerfect in the Delaware Court of Chancery alleging that the law firm of Skadden Arps has billed the translation services company for upwards of $14 million in undisclosed legal fees since being appointed the company’s custodian, causing significant financial harm to the company’s employees.
According to recent court documents, in the over two years since the TransPerfect sale process was complete, the company’s Chancery Court-Appointed custodian, Skadden Partner Robert Pincus, has continued to bill the company every month for undisclosed services, including his own $1,475 an hour fee. According to one recent motion by TransPerfect, Pincus’ responsibilities remain unclear, and any efforts to ascertain the substance of his work on behalf of TransPerfect have been met with silence. The Chancery Court has kept all invoices and description of services under seal – allegedly to protect the sale process, which ended over two years ago.
In their call to action for Delaware Governor John Carney, the employees wrote, the “actions of Robert Pincus and his Skadden partner, Jennifer Voss, have hurt TransPerfect. For the first time ever, this spring we will not receive raises. Even worse, many of us who work hourly have had our hours reduced or been furloughed entirely. We are asking for your office to open an inquiry to scrutinize both the cozy relationship between Chancellor Bouchard and his former firm, as well as the Chancery Courts complete lack of transparency and Skadden’s questionable billing practices. These actions and to end this Court-sanctioned looting of TransPerfect. It’s hurting us in irreparable ways. Enough is enough, we need you to step up and investigate this matter immediately.”
Said Chris Coffey, Citizens for a Pro-Business Delaware’s Campaign Manager, “From day one of being appointed TransPerfect’s custodian, Robert Pincus and Skadden Arps have been taking advantage of the company and its thousands of employees by billing them millions of dollars without saying why or what for. These Skaddenomics are so shady, it’s become increasingly clear that Governor Carney needs to step in and scrutinize Chancellor Bouchard, who has been violating his own court’s rules and effectively funneling over $14 million dollars to friends at his old law firm. We’ve called on the Court to put an end to the secrecy, and we’ve called on the state legislature to advance the bill before them that would create a fairer and more transparent Chancery Court by requiring all custodian’s fees to be disclosed. Now we’re calling on the governor to open an inquiry. These thousand employees and our members deserve to have their voices heard. Enough is enough.”
In my educated opinion, after over a year of intense research on the TransPerfect case, it is not only the very suspicious and biased decisions from Chancellor Bouchard of the Delaware Chancery Court at issue, but the highly unusual conduct of his Court-appointed Custodian, Skadden attorney Robert Pincus which, in my opinion, leads to the only logical conclusion that a conspiracy, based on greed and inbred corruption, is at work in Delaware. What a shame that the glorious reputation of our tiny, but first state of Delaware, will have it’s national reputation smeared and destroyed by a small group of selfish attorneys, judges and investment bankers. As the saying goes, when something feels so wrong, follow the money (please see this New York Court document): I spoke with several TransPerfect employees about why they left recently, and here’s a big reason that is not easy to explain: The auction they have been forced to participate in by Chancellor Bouchard, as a management team, as it turns out, is believed by many employees to be a sham. First, it is filled with conflicts of interest. TransPerfect’s main competitor, Lionbridge is a company with a deep history of eliminating U.S. and Western European jobs to send them offshore (TransPerfect has most of its jobs in America, Lionbridge has 6% of its jobs in the good-ole US of A). Lionbridge is owned by the private equity firm, HIG. Credit Suisse is the investment bank allegedly running a fair auction, but therein lies the rub. HIG also happens to be a client of BOTH Skadden Arps and Credit Suisse (CS). Is Bouchard’s apparent and possible Ponzi scheme starting to come into view for you now? It becomes clearer to me everyday. It’s like the Uranium One scandal, but on steroids — with U.S. jobs being the victim instead of our national security. Here’s my opinion: It gets shadier and shadier… Credit Suisse owns the risky Lionbridge debt, who as they say in the industry, was a “dog with fleas” and it seems the only way CS can get this risky debt paid back to them is by steering the fair auction away from Shawe, and toward their other client HIG. If HIG can buy out its biggest rival and eliminate the competition, “HIG-owned Lionbridge”, will be in a much better position to pay Credit Suisse back its debt; otherwise it cannot. Ahhh… but this onion still has more layers to be peeled. Equally disturbing is that the Custodian, Bob Pincus, works for Skadden; and Skadden (Bouchard and Judge Strine’s old firm) are attorneys for both CS and HIG!!! How can the Chancery let all these people that work together, seemingly scratch each others backs to get richer and richer. Only in Delaware folks, can such blatant and gregarious corruption be tolerated and allow to exist. Think about it: Why would the Custodian choose CS to run the auction when CS just months ago advised and raised money for HIG’s purchase of TransPerfect’s #1 competitor, Lionbridge?? It stinks to high heaven!!! Further, in my opinion, Bob Pincus and Skadden should immediately cease their role as Custodians, because, as attorneys to both Credit Suisse and HIG, they are anything but neutral; in fact, they owe CS and HIG a duty of undivided loyalty — so how can Skadden run a fair auction and pick a fair winner? I guess the answer is always the same…. only in Delaware. Let’s not forget that back in August of 2015, Chancellor Bouchard ordered the sale of a thriving profitable company for the first time in the history of Delaware to help Co-CEO Elizabeth Elting get a better price for her shares, indeed that the market was not willing to bear. Most importantly, he said that the sale should be conducted with the intention of maintaining the company as a going concern. Well Chancellor Bouchard, below is an article about all the defections at TransPerfect and the loss of the entire C-level suite and senior technology team, since you handed down your unprecedented order. Is this what you meant by keeping the company going- “as a going concern??” What you can’t tell from reading the public material that I will tell you from talking to the staff, is that no meetings are taken seriously or attended by Credit Suisse big wigs or by the Alvarez & Marsal consultants except for…? You guessed it, the HIG-Lionbridge meetings. The other meetings are attended only by CS neophytes. These employees are honorable, and they have fought to keep this company afloat while the custodian Bob Pincus, Skadden Arrps and his army of consultants looted over $25 million from TransPerfect with Skadden billing $1 million last month alone. The same employees who have continued to hold this great company together and raise the revenues every year for TransPerfect have been abused by the court and the custodian for sure. Only they know from attending the auction meetings that HIG-Lionbridge is the Chancery’s pre-determined winner — and the vast majority of them will get their jobs shipped overseas, thanks to the crooked Delaware court system — I don’t blame them at all for leaving on their own terms. I promised you folks, I would uncover the dirt, but I had no idea how deep this ditch would go. This plot is still thickening and I will keep digging until I find out what I suspect is the truth: I believe this whole thing is rigged: the $150 million no-witness trial, the unprecedented result and the “auction” remedy. I feel the money trail will lead straight back to the Delaware elite. I hope Bouchard and his cronies are listening and robes or not, no one gets a pass in my column. This is not the News Journal, where you can get coverage stopped with a well-placed phone call. I’m here for you, my readers, and this investigative journalist will not stop fighting until justice prevails.
“We arrived to the hearing with a full bus of TransPerfect employees,” said Chris Coffey, Campaign Manager for CPBD. “These employees have been ordered not to speak out against the court, but still risked attending the hearing to fight for their jobs. We hope that Delawareans will see the threat that the Chancery Court’s decision poses to Delaware’s economy and to more than 4,000 livelihoods. We urge them to sign the petition and stand with us to protect our state and its residents.”
CPBD was formed after the Delaware Court of Chancery ordered an appointed custodian to sell TransPerfect amid an internal dispute among company owners. Over the past few months, CPBD has been involved with court proceedings, submitting an amicus brief and arguing that the Court of Chancery appoint a custodian to act as a provisional director until the dispute is resolved – and continues to work with members of legislature to get the bill passed. “I am concerned that the TransPerfect case will negatively impact the state of Delaware – and I am actively working with Citizens for a Pro-Business Delaware to make sure our state keeps its long and well-deserved reputation as the state where businesses come from around the globe,” said Senator Colin Bonini. “We all want the same thing – to keep jobs in Delaware and to keep our state’s economy strong.” Citizens for a Pro-Business Delaware is a group made up of more than 2,200 members including employees of the global translation services company TransPerfect, as well as concerned Delaware residents, business executives, and others. They formed in April 2016 to focus on raising awareness among Delaware residents, elected officials, and other stakeholders about the issue. For more information on Citizens for a Pro-Business Delaware, visit DelawareForBusiness.org. Contact: Mary Urban, [email protected] Julijana Englander, [email protected] SOURCE Citizens for a Pro-Business Delaware
Now, we are close to a year-and-a-half later with the TransPerfect case still not yet certified for an appeal. We have the appointment of a custodian, who is, of course, a former law partner of Bouchard’s. Since that time, TransPerfect has been forced to incur an incredible and outrageous $8 million dollars in fees — and the number grows daily! This boggles the mind!? Let’s think about this, folks… Phillip Shawe is running a $500-million-dollar company for 24 years and has never had an unprofitable year. Now the Court comes in with no experience in this business and forces TransPerfect to spend $8 million dollars on Bouchard’s cronies to date and this case continues and the millions mount! How and why can this blatant stealing from this company continue?
Additionally, the very employees who made this company a success are expressing their outrage at the Chancellor’s decision! They work in fear of being fired by this custodian. One courageous employee had the nerve to stand up to the Chancellor’s unlawful violations of the employees’ First and Fourth amendment rights — and filed a Federal Lawsuit against the Chancellor and the custodian!
Apparently Judge Bouchard and his custodian went after personal e-mail accounts and potentially cell phones of TransPerfect employees, and if they refused, the workers could be terminated! Folks, I don’t know what you call this, but I call it unconstitutional, illegal, and grounds for impeachment! I have never heard of or seen a worse case of judicial overreach, cronyism, and possible corruption in any Delaware Court in my life time.
In my opinion, Chancellor Bouchard has cast a dark shadow over the once pristine reputation of the Chancery Court and the great state of Delaware, as the nation’s corporate capital. The press is watching, folks! Last Sunday’s Delaware News Journal ran a front page cover story shedding light on Bouchard’s shenanigans, but this just scratches the surface. There is much more to tell, and the future of Delaware as the incorporation capital of the world, and therefore its economy, is seriously at stake.
It appears that Bouchard is playing favorites with Plaintiff Elizabeth Elting’s local counsel, his 20-year friend, Kevin Shannon of Potter Anderson. You are reading it here first, folks… soon I predict many companies will be refusing to do business in Delaware because of this case! Bouchard’s insidious actions in The Chancery Court and his apparent efforts to enrich his buddies at the expense of the hardworking people of TransPerfect must stop. Bouchard’s decisions have weakened the credibility of Delaware’s Equity Court and the world is watching.
It is time for the people of Delaware to call their local legislator and say no to cronyism and no to obvious improprieties. We must demand an investigation, folks, and somehow we must stop this! No one is above the law, and this includes Andre Bouchard. We must send a strong message to corporate America that Delaware is still a place to do business before it’s too late. Stay tuned……..much more to come!
As always, your comments are welcome.
SOURCE:
http://hubpages.com/business/The-Appearance-of-Corruption-and-Cronyism-Continues
Controversial TransPerfect Global case
The controversial TransPerfect Global case is still in the Delaware Court of Chancery. This outrageous situation gets more and more astounding as each ruling is adjudicated. The blatant unfairness and obvious bias in my opinion by the presiding Chief Chancellor, Andre Bouchard towards one party over the other and the financial damage this Judge has done to this viable company through his determinations is beyond remarkable.
The use of his judicial discretion under the law considering his appearances of impropriety involving cronyism, a dearth of evidence, and in effect his legislation from the bench by his rulings contrary to established Delaware law, are indeed frightening and disconcerting. I have been asked by members of my network and one reporter why I’ve taken this on. The answer is that whenever there is, in my educated opinion, an obvious and insidious case of injustice involving politics or government, which I can back up by the facts, especially in my home state of Delaware, then I’m going to write about it. I’ve become a pundit of sorts and it is an enjoyable hobby. My Coastal Network, which reaches over 6,000 people through personal e-mails and now Facebook is an informative vehicle that has been extremely effective over the years.
One of the best things about being an American is being able to use my First Amendment rights of free speech, especially since I like to write. Believe me there are those in this country who would love to take that away from us, and we have to be eternally vigilant in all matters of our constitution.
That said, I first noticed Chancellor Andre Bouchard in regard to his involvement with the Register of Wills office in Sussex County, Delaware where he used his Judicial power under the law to appoint two apparently incompetent chief deputies who couldn’t properly do the job, ignoring the recommendations of the elected Register of Wills, the Honorable Cindy Green, thus thrusting this important office into chaos. His arrogance and disrespect of the elected Register of Wills by making political appointments instead of the most qualified, made me wonder then about his objectivity.
Chancellor Bouchard further led the charge in the Delaware legislature to do away with this office, putting everything involving wills under the Court of Chancery. This would have taken away the personal service in Sussex County for its citizens and ultimately costing the Sussex County residents more money. Fortunately, the legislature chose to not implement this action. Regardless, after that I started watching Bouchard’s Chancery Court cases. The TransPerfect case caught my attention. Since then, I have followed it in detail, investigated and researched those involved, gleaned expert legal opinions, spoken with employees of the company, read all the court documents, and have ascertained that something is radically wrong with the whole deal.
The two founders and stockholders, Phillip Shawe and Elizabeth Elting, are entwined in a legal battle that is rocking the corporate world. Elting wants to sell and Shawe does not. Shawe is willing settle out of court, Elting refuses to settle, using the bias of the court to hopefully glean more money in her pocket. Chancellor Bouchard’s decision to sell this viable company—clearly based without merit or proper evidence, creates huge concerns for those who are incorporated in Delaware and those who might choose to do so in the future. If Delaware loses its corporate franchise, it could lose millions of dollars, plummeting it into the red so deep, it would never recover.
Reiterating the facts, under Delaware business law, a company is not supposed to be sold unless there is evidence of irreparable harm. TransPerfect has shown a profit for the past 24 years, and now makes $500,000,000 a year — no harm here at all. Regardless, the Chancellor does have the authority to force the sale of a company when there are disagreements if there are only two stockholders. Folks, TransPerfect has *three stockholders* and Bouchard is making new law here according to my legal experts. Bouchard has a long-term friendship and business connection with Elizabeth Elting’s lawyer, Kevin Shannon; they worked on the Disney case together 20 years ago, and served on an educational panel together in New Orleans *during the decision stage of this trial.* Andre Bouchard should have recused himself immediately. *By not doing so, he has created the appearance of a serious impropriety.*
To make matters worse and making objective observers concerned about the possibility of corruption, Bouchard ordered a custodian—another one of his good friends and former colleague Robert Pincus to take over the company. He has ordered an audit of the company with huge salaries and fees to all of his friends, costing the company around $8,000,000 dollars over the last 10 months.
Any doubts who benefits from this long drawn out affair? Bouchard’s cronies. It gets worse than this folks… Bouchard has denied the production of evidence indicating a plot by Elting to make Shawe look bad by having her husband Michael Burlant (TransPerfect’s lease agent) intentionally create lease problems overseas. Elting also has taken funds from the company (over $20,000,000 dollars), which are also questionable. Yet when Phillip Shawe checked out Elting’s e-mails on the company server with a professional fraud investigator on hand — shortly after finding out that she had secretly made over $150,000 in payments to her attorneys and financial advisors indicating her questionable activity, Chancellor Bouchard arbitrarily and capriciously sanctioned Shawe on the sole say so of Elting’s lawyer.
No evidence, no testimony, no proof — denying Shawe his due process. The sanctions include 1/3 of Elting’s legal fees and 100% of her fees for the hearing on sanctions created by Bouchard in the first place, where he ruled against Phillip Shawe in all ways, costing him millions of dollars.
The bottom line here is thousands of TransPerfect employees could lose their jobsand a viable company could be destroyed. Obviously Judge Bouchard does not care about that. The bias and prejudice against Phillip Shawe by this Judge is unprecedented in Delaware’s Chancery Court. Could it be that Andre Bouchard is using his Judicial power by suppressing evidence to rig a result that’s good for his buddy Kevin Shannon (Elizabeth Elting’s attorney), thus creating huge legal fees that are going into Shannon’s pocket?
The apparent and absolutely unnecessary raping of a company (which epitomizes the American dream) by the Judicial Branch of the State of Delaware through the actions of a rogue Judge creates much negative speculation which is never a good thing. These facts and appearances of impropriety make me shake my head and wonder how this can happen in Delaware’s valued and respected equity court? More to come, so please stay tuned.
With respect as always
As always your comments are welcome and subject to being forwarded.
Respectfully Submitted,
JUDSON Bennett-Coastal Network
In the past several months, I have written extensively about the astounding case still going on in Delaware’s Chancery Court involving TransPerfect Global, whereby Chief Chancellor Andre Bouchard has ordered the sale of a private, extremely profitable company. According to my expert legal sources, the Delaware Chancery Court is under no duty to insert itself, and replace the free market by adjudicating a solution when there are simply disagreements between stockholders that involve no wrong doing. This company should not be dissolved under the present circumstances. Chancellor Bouchard has seemingly made a radical, rogue, and reckless decision that could damage the state of Delaware’s corporate future.
TransPerfect has annual revenue of approximately $500 million and 4,000 employees in 90 different cities worldwide. It also happens to exemplify the American dream, where two people had an idea and created a successful business. Unfortunately, Elizabeth Elting now wants an immediate exit strategy and is using the valuable resources of the court to manipulate a sale process that gives her a share price that she is not entitled to on the open market and is selfishly leaving the employees up in the air. Basically, Chancellor Bouchard has essentially applied family court principles to this business saying, in effect, that when two people get a divorce and cannot agree what to do with the house, the house must be sold to a third-party, and the monies received are to be split equally.
Why is this wrong? Under Section 226 of the Delaware Business Law when two or more shareholders cannot agree, the court can order the sale of the company, but there is one key difference. There must be a showing of irreparable harm. The easiest way to determine irreparable harm is by a very simple indicator. Is the company profitable? TransPerfect Global has been extremely profitable every year of its 24-year existence and continues to thrive. So where is the irreparable harm Chancellor Bouchard? Just because one owner claims she doesn’t want to work with her partner anymore doesn’t mean the Court should intervene. Your “equitable” solution is a dangerous precedent which will not only scare companies away from Delaware, but clog our judicial system with merit-less cases whenever a stockholder wants a better deal than they negotiated.
Interestingly this is only part of the problem, because in this case there are not just two stockholders, there is a third, and that changes things drastically under Delaware Law. Plaintiff Elting owns 50%, Defendant Shawe owns 49%, and Shawe’s mother owns 1%. Besides being clearly prejudiced against Shawe, ignoring the overwhelming testimony of 10 witnesses to Elting’s 0, and operating under the appearance of several improprieties, Chancellor Bouchard has overreached his authority in another way that is just as equally threatening to the incorporation business that Delaware relies so heavily upon. This type of judicial overreach is so outrageous that many legal experts are truly fearful of the future of this State’s reputation.
The bottom line is that Chancellor Bouchard is ignoring the fact that there are three stockholders and saying basically that “because Shawe’s mother usually votes with him, it is the same as there being only two.” This action by Chancellor Bouchard is unprecedented, has the potential to create turmoil and needless litigation in the business community, and has prompted employees and concerned citizens to organize to bring about change in the law; whereby a Judge cannot arbitrarily order the sale of a company when legal precedent states otherwise. In reality, they shouldn’t have to change it, because Bouchard is already acting outside what the legislature intended his powers to be by fabricating the “irreparable harm” component.
Senator Colin Bonini (R), much to his credit, proposed Senate Concurrent Resolution 91 which basically requested that the Delaware Bar Association review the law and come up with viable legal alternatives to rulings of this sort. The resolution was non-binding, harmless in all respects, and was intended to open the door for potential legislation if after review and discussion changes were determined to be reasonable. Unfortunately the proposal never came to a vote due to a lack of time and lack of understanding on both sides of the political aisle. Not really knowing the facts of the case, certain establishment politicians who wanted to maintain the “status quo,” regardless of this apparent inequity, planted their feet and closed their minds to positive change and clarification of the law.
Senate Minority Leader Gary Simpson could have facilitated the vote on this issue, but chose not to do so. According to Senator Simpson, he contacted former Chief Chancellor Chandler who was a highly respected Sussex County Judge. Chandler advised Senator Simpson that often the Chancery Court orders the sale of companies when there are disagreements in 50%/50% partnerships, however Senator Simpson did not tell him that this was a highly profitable company, that the decision was unprecedented in the history of Delaware, and that there were three stockholders and not just two. As quoted in the News Journal– “We have a reputation in Delaware for having a Chancery Court where litigants and their attorneys know how Delaware law reads,” said State Sen. Minority Leader Gary F. Simpson, a Republican and opponent of changing the court’s authority. “To give uncertainty because a party may be able to persuade the Delaware Legislature to change things is just bad.”
Well folks if something is wrong in the law, and something is inequitable, or allows a freshman judge to interpret it in an inequitable way, then the law needs to be changed. I disagree with Senator Simpson and others who failed to support this positive attempt at making Delaware’s Chancery Court and state laws better and more business friendly, with less uncertainty. Corporate litigants, who have disputes, should be able to count on Delaware for fair and equitable solutions under the law; and our laws should not be frozen in time when they are ambiguous enough for Chancellors to abuse their discretion by way of an unclear loophole.
Frankly, according to my sources in the legal community, Chancellor Bouchard has already tarnished his own personal reputation with his handling of TransPerfect case. Regardless, there is a larger cause for all Delawareans that hangs in the balance. Our business-friendly reputation as the nation’s corporate capital and all the thousands of jobs this creates is now at stake. Our state’s reputation for predicable and reasonable adjudication of business disputes is essential to the economy and the people of Delaware. If Bouchard wants to gamble, he should go Dover Downs with his own money. He should not be betting Delaware’s reputation from the bench with arbitrary and capricious decisions.
Regardless, this writer will continue watching and reporting on this remarkable case in Delaware’s Chancery Court with the Honorable Chancellor Andre Bouchard presiding. The “rub” in this case is not going to go away and there is no doubt that appeals will be taken and there will be another campaign at correcting the law again in January. As always your comments are welcome.
As always, with Delaware’s best interest in mind
Respectfully Submitted,
JUDSON Bennett-Coastal Network
Delaware Companies at Risk
SENATE CONCURRENT RESOLUTION NO. 91 ENCOURAGING THE DELAWARE STATE BAR ASSOCIATION, ITS CORPORATE LAW SECTION, AND THE COUNCIL OF THAT SECTION TO EXAMINE THE STATE’S BUSINESS BUSINESS ENTITY WITH AN EYE TOWARDS MAINTAINING BALANCE, EFFICIENCY, | Source
Summary of bill
The bill is online and HubPages does not allow duplicate content, even if repeating the bill’s text. So here is the summary and use the links above to read it in its entirety.
Purpose:
Encouraging the Delaware state bar association, its corporate law section, and the council of that section to examine the state’s business entity with an eye towards maintaining balance, efficiency, fairness and predictability.
SYNOPSIS
This Resolution encourages the Delaware State Bar Association, its Corporation Law Section, and the Council of that Section, to examine the State’s business entity laws with an eye towards maintaining balance, efficiency, fairness, and predictability.
Respectfully Submitted
I have been a staunch defender of Delaware and this issue is lurking, and still too few are paying attention. We need to change the “who cares?” atmosphere.
Are you with me?
Respectfully Submitted,
JUDSON Bennett-Coastal Network
Judson Bennett
A court drama being played out may result in TransPerfect’s two chief competitors in the translations services industry seeing increased revenue.
Lionbridge Technologies (LIOX), based in Waltham, Mass., is the largest translation services company in the U.S., with revenue of $560 million last year. TransPerfect is the second largest in the U.S., with revenue last year of $505 million. London-based SDL (SDLLF) could also benefit.
While beating its rival handedly in growth and profits, TransPerfect is experiencing a serious power struggle in the executive suite that has ended up in the courtroom. Lionbridge has attempted to capitalize on this controversy and courtroom drama by planting seeds of doubt on the future of TransPerfect with its customers.
However, this may not be the boon LIOX is expecting. Although TransPerfect’s power struggle began in 2013, it has shown no signs of slowing down the company. So far this year, sales are up more than 11% with May being the most successful month to date. Whatever the Delaware Chancery Court decides, there will inevitably be a lengthy appeal process and co-founder visionary Phil Shawe has made it clear that he is not going anywhere.
The Delaware state court’s apparent willingness to step into the affairs of a private company has come under fire from many directions, including most-notably former New York City Mayor Rudolph Giuliani, who criticized Delaware’s new Chief Chancellor Andre Bouchard (a Canadian) for an “un-American” decision that was overreaching, intrusive, and against American free-market principles.
Co-CEO and fellow shareholder Elizabeth Elting, who according to many employees has a very limited role in the day-to-day functions of the company, is suing for TransPerfect to be dissolved and force-sold to the highest bidder. When Elting co-founded the business with Shawe 24 years ago they had had a romantic relationship, but that ended years ago. She now claims the two cannot work together anymore and that the New York-based company should be auctioned off because she is upset with their personal relationship. It is also obvious that Elting is now using the court as a weapon to maximize her buyout price.
Shawe recently offered $300 million cash to buy her half of the company. In an attempt to extract more money from Shawe, Elting recently told Forbes Magazine that she intends to counter, but no offer has been forthcoming. It appears Elting believes the Delaware Court will give her a better exit strategy than she can achieve through negotiation, and thus, is content to wait it out until Bouchard’s decision and all appeals, are rendered final.
TransPerfect is the largest privately-held company in the $35 billion translation services industry. With 4,000 employees in 100 cities on four continents TransPerfect is capable of translating more than 170 languages. It has a vast array of clientele, including almost every Fortune 500 company, such as USPS, IKEA, Johnson & Johnson, and Hilton Worldwide.
Elting has used a strategy of saying “no” to all routine decisions to create “deadlock” under Delaware law, and therefore wants the court to auction the company to the highest bidder. Unable to find a judge receptive to her case in New York , she filed a second lawsuit two years ago in Delaware. In the non-jury trial, despite the fact that Elting couldn’t produce one witness to corroborate her testimony, while Shawe presented 10 witnesses on his behalf, the judge sided with Elting on dissolution, and appointed a custodian to oversee a sale process.
This means for the first time in U.S. history, a private, profitable company that has not been accused of any wrongdoing or impropriety is being put on the auction block. Although the harm caused by Chancellor Bouchard’s use of the word “sale” has raised eyebrows with many TransPerfect employees and customers, Bouchard also said he believed that Shawe was the most logical buyer. In the meantime the court has put a middleman in charge of the company for the purpose of having it dissolved and force-sold against the wishes of two of its three shareholders. Elting owns half, while Shawe and his mother own the other 50%.
It appears the employees, TransPerfect’s most important assets, are extremely upset with Bouchard and his apparent willingness to rely on the uncorroborated testimony of one witness who serves no meaningful role at the company. Hoping to save the company they work for, as well as their jobs, the employees wrote to the judge before he rules on the bizarre case currently before him.
On April 26, TransPerfect’s employees sent two letters to Bouchard; Peter C. Schwartzkopf, the speaker of the Delaware House of Representatives; other members of the Delaware house; and the media to present their perspective before a final ruling in the case.
In order to inform the public of their situation, a group of 610 TransPerfect employees called Citizens for a Pro-Business Delaware ran radio ads on local Delaware stations. They also placed a two-page advertisement in the Delaware News Journal that reprinted the contents of each letter. So far, the employees have not received a response from Bouchard, who has issued a series of unprecedented decisions that are so unusual and blatantly one-sided that observers say they are not based on law and equity.
Shawe’s lawyer Martin Russo of New York law firm Gusrae Kaplan Nusbaum told Slator.com , “Ms. Elting has the right now to sell her shares on the open market without interference from, or affecting Shawe’s ownership rights; but that she chooses not to take the market price is an indicator as well. Shawe’s $300 million offer is magnanimous, and is surely better than (what Ms Elting) would get as a 50% owner on the market.” Russo told the website the value represents 10x the company’s after-tax cash flow profits of 30 million and described the $300 million offer for Elting’s 50% stake as “extremely generous.”
However, if Elting refuses the offer and forces the sale, this could provide a big opportunity for either Lionbridge or SDL to purchase TransPerfect and become the undisputed leader of the translation industry.
This TransPerfect Case Just Gets More Tangled
I have written several times about the TransPerfect Global fiasco; the one where Delaware’s Chief Chancellor Andre Bouchard ordered the sale of this very profitable company. A decision that will most likely result in the loss of jobs and even destabilization of the entire company.
Here you have an American success story, and a Delaware Judge who has overstepped his authority by making an arbitrary and capricious decision, which is resulting in an un-American situation. This decision is not only bad for Delaware, butbad for America.
What is even more interesting and disconcerting, the temporary custodian of the company appointed by Chancellor Bouchard has now decided to apparently inhibit/prevent employees of TransPerfect from exercising their First Amendment rights. Apparently, 600 employees of TransPerfect are openly speaking out about the Court’s decision and the happenings within the company.
Please read the memo below that was sent to the Management Team of TransPerfect requiring spin to be propagated to employees and threatening disciplinary action including job termination. I was copied with this threatening memo by my internal source.
Custodian: TransPerfect is Doing Very Well
Custodian Robert Pincus says TransPerfect is doing well. If so, why is Bouchard looking to auction the firm?
Robert Pincus to TransPerfect Staff
To the Management Team:
TransPerfect is performing exceptionally well and growing quickly, thanks to your hard work. We are committed to keeping it that way, and our highest priority is supporting you and the continued success of the business.
It has come to our attention that some of our employees have recently spoken with the media about the pending litigation between the shareholders of TransPerfect, and in some instances seemingly have sought to attempt to pressure the Delaware court. We believe that those actions are counterproductive and that they should stop.
If you receive a call from a reporter or member of the media, our Company policy is now that you must refer that person to Joel Mostrom, who will respond directly or designate another spokesperson. We want to remind you, and we ask you to remind your colleagues, that: this policy covers all forms of responses to the media, including, without limitation, off-the-record and anonymous statements.
Any deviation from this policy may lead to disciplinary action up to and including termination. Your strict adherence to this policy is expected, as well as appreciated by management and your colleagues. [TransPerfect Employee Handbook] The purpose of this policy is to avoid media and other actions that may negatively impact TransPerfect’s business. Please be mindful of the policy and its importance going forward. We ask each of you as our key managers and leaders to continue to focus on your responsibilities and serving the needs of our clients. All of our efforts should be aligned in that direction. To the extent that your colleagues have questions regarding the litigation, we have included the attached FAQs. Thank you.
Frequently Asked Questions for Employees
Bouchard wasted no time in leaving his mark on the court with one of his first big cases, Elting v. Shawe C.A. No. 9700-B. It makes it clear that Bouchard is going to do things his way whether or not the law and evidence agrees with him. This decision is not so surprising considering Bouchard’s history of cronyism at the Register of Wills office in Sussex County. This case couldn’t help but remind me about the piece I wrote, on April 8, 2016, when I learned that one of the attorneys was Kevin Shannon from Potter, Anderson and Corroon. Mr. Shannon and Chancellor Bouchard have an illustrious history together, both working on the infamous case “In Re The Walt Disney Company Derivative Litigation” when Bouchard was a practicing attorney. In that case, a derivative action was brought on behalf of the shareholders disputing the $100 million payout Disney gave to Michael Ovitz after he was fired. Bouchard represented Disney and Mr. Shannon represented a fellow Board member Sanford Litvack.
Mr. Shannon and Chancellor Bouchard as recently as March 16, 2016 were co-panelists together in New Orleans at a Tulane University law panel. Considering Chancellor Bouchard’s history, it comes as no shock that Mr. Shannon’s client not only won the case but as far as I can see, every motion as well. He even held a hearing to sanction Mr. Shawe for, in part, reading his partner’s emails that were open and available on the company server – stating that the company privacy rules did not apply to her. Could this have been done as a means to make Shawe pay Elting’s outrageous buyout demands? For the record, as a few publications reported this week, Shawe offered her $300 million this week and if she declines or refuses to make a counter offer, this should tell any reasonable person which party wants to come to a settlement and which one is playing games?
While I have fervently criticized Chancellor Bouchard in the past, it seems he has truly gone off his mandate in this instance by ignoring evidence indicating the possibility of tampering, and intent to take down a company from within? Instead he has focused on intemperate emails between the two partners to dissolve a thriving and profitable company, while ignoring suspicious irregularities whereby there were, according to Phil Shawe’s defense team, serious breaches of fiduciary duty?
Employee Campaign
In case you haven’t seen the case, which I’ve written about twice in recent weeks, let me sum it up for you here: Bouchard’s Delaware Court of Chancery ordered the sale of a $500 million profitable translation business because one of the partners who has a very limited role at the company claimed there was a deadlock. The fact that the company has been and continues to make record profits makes this decision all the more disturbing because this has never happened before in the history of Delaware!
After reading the various papers in the court file it is very obvious in my opinion that Ms. Elting seems to be manufacturing deadlock and using the court to gain a payout she could never get if she sold her shares on the open market. So why is this a concern for the people and the great state of Delaware? Chancellor Bouchard is sending a message to corporate America that if you are having any squabbles at a board meeting then by incorporating in Delaware you risk the court selling your company out from under the rightful owners.
The decision was so outrageous that former New York Mayor Rudy Giuliani chimed in and has been strongly critical of the decision. Giuliani said, “it is unAmerican for the court to break up a thriving successful company just because two directors are having some disagreements.” The last thing Delaware needs with all of its other economic problems is a mass exodus by corporate America.
I applaud Giuliani’s efforts because someone needs to come to Delaware with a big broom and sweep out this mess. I said it before and I’ll say it again… the bottom line is that a very well politically connected lawyer who was appointed Chief Chancellor of the State of Delaware’s Chancery Court — even though he never served a single day on the bench, is in my opinion, making arbitrary decisions that seem to have no basis in law or fact. He apparently favors a single litigant (the plaintiff) whose attorney has a long-standing relationship with the Chancellor himself. This is indeed the appearance of an impropriety and most likely will be part of an appeal by Shawe’s legal team, if they so desire.
From my perspective, I believe it is no coincidence that Chancellor Bouchard either got this totally wrong, or is making sure “his” people are taken care of. Nothing could be more compelling than the dissatisfaction of more than 600 employees of TransPerfect themselves who took out two full page ads in the Delaware News Journal expressing their opinion that there was no dysfunction at TransPerfect and that the Chancellor’s decision will inevitably result in the loss of many jobs, if not the total downfall of this extremely successful business.
Chancellor Bouchard should know and care that people’s livelihoods are at stake and the corporate world is watching. This is his first big case, and it will not only define his career, but risks the future of Delaware as the state of choice for corporate America.
Open Letter to Chancellor Bouchard
600 TransPerfect employees are urging Chancellor Bouchard to maintain the company management and leadership teams | Source
Prepared by Judson Bennett
Contact Judson Bennett
References:
Website for TransPerfect Global:
http://www.transperfect.com/
Link to Conference in New Orleans:
http://www.law.tulane.edu/tlsLifeAfterLS/Files/CLIAgenda-Revised.pdf
Respectfully Submitted,
JUDSON Bennett-Coastal Network
What Should Chancellor Bouchard Do?
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Chancellor Andre Bouchard
Misguided Delaware Chancery Court Chancellor Andre Bouchard | Source
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