March 20, 2018

Joint Ventures: Getting a “Quickie” Delaware Divorce

So the business marriage that you hoped would be like Paul Newman & Joanne Woodward’s turned out to be more like Kris Humphries & Kim Kardashian’s?  This recent blog from Francis Pileggi says if you’re a Delaware corporation, there’s no need to go to Vegas to quickly untie the knot – just head to the Chancery Court.  Here’s the intro:

Delaware law allows for a summary proceeding to seek a quick business divorce in certain circumstances. Section 273 of the Delaware General Corporation Law allows for, in essence, a no-fault business divorce if the criteria of the statute are met. Those requirements are that: (i) there are two 50/50 stockholders; (ii) they must be engaged in a joint venture; and (iii) they must be unable to agree upon whether to discontinue the business or how to dispose of its assets.

If those prerequisites are met, one of the 50% stockholders can file a petition to dissolve the corporation and request the appointment of a receiver. If the opposing party cannot agree within three months to a plan of dissolution, the court may then take action to appoint a receiver to oversee the dissolution.

The blog points to the Chancery Court’s recent decision in Feldman v. YIDL Trust,  (Del. Ch.; 3/18) as providing a good example of the set of circumstances that will satisfy the statutory prerequisites for this type of business divorce.

John Jenkins