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Asking the Court to Define Fair Settlements in Dell Appraisal
Motion to determine what Dell must offer
Importance as model for investor reliance on appraisal process
A motion was filed this morning in the Dell appraisal case to request
the court’s resolution of the questions we have been addressing about
the terms of settlement Dell must offer to other claimants.[1]
Motion to determine what Dell must offer
Based on its interests and responsibilities as the petitioner that
initiated the Dell appraisal proceeding to support Forum participants,
Cavan Partners has made the following motion for the court to (a)
define the specific terms of a settlement it approves between Dell and
the T. Rowe Price petitioners, and then (b) enforce Dell’s obligation
to offer all other claimants the same terms of settlement:
Importance as model for investor reliance on appraisal process
Beyond its relevance to Dell appraisal claimants who might be offered
88 cents per share to release their rights to appeal decisions in the
case, the court’s decision can be expected to establish a model for
settlements in future appraisal cases. Cornish F. (“Con”) Hitchcock of
the
Hitchcock Law Firm PLLC,
the expert on investor rights who collaborated in the preparation of
the motion as special counsel to Cavan,[2]
has offered the following observations for Forum participants’
consideration:
This case has presented the Delaware court with the task of deciding a
number of issues, and the resolution of those issues will have a huge
impact on how future appraisal cases are litigated. The motion being
presented now asks the court to define fair processes for settlements,
something that is especially important when some claimants depend on
another claimant to manage their interests.
The particular dispute at issue now is a bit unusual in that the Court
was asked to approve an agreement without notice to all parties,
without a public hearing, and without being provided with the text of
the agreement – and to do all this under considerable time pressure so
that the money being paid by Dell to the T. Rowe Price claimants could
be booked and reported in three days’ time. In approving the
settlement, the Court noted the importance of giving notice of the
settlement to active participants in the case and cited the need to
protect the rights of non-settling claimants. Such notice was not
provided, however, even though there are claimants other than T. Rowe
Price who have the right to an appeal and who have not received the
same 88 cents/share offer to waive an appeal. Cavan’s motion thus
seeks to clarify the rights of these claimants in this case and to
clarify the procedures for future appraisal cases where partial
settlements can affect the interests of other claimants.
Your comments on these observations are invited, and I will of course
welcome questions about the motion.
GL – October 14, 2016
Gary Lutin
Chairman, The Shareholder Forum
575 Madison Avenue, New York, New York 10022
Tel: 212-605-0335
Email:
gl@shareholderforum.com
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