Company Did Not Breach Its Redemption Agreement Because of Diligence of Directors

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Court Case Digests
July 23, 2021

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7373 Computer Integrated Systems Design
541512 Computer Systems Design Services
securities litigation
going concern, redemption, burden of proof, preferred stock, shareholders
Cont'l Investors Fund LLC v. TradingScreen Inc.
2021 Del. Ch. LEXIS 157, 2021 WL 3120860
US
State Court
Delaware
Court of Chancery
N/A
Laster

Summary

The defendant did not breach its redemption agreement because a committee of directors, “properly engaged in the judgment-laden task of determining the amount of funds that the company could use for redemptions … [and] determined that using a greater amount of cash to redeem more shares threatened the company's ability to continue as a going concern.” As a result, interest on the asserted obligation back to 2013 was not allowed at 13%, the amount per the agreement.

See Also

Cont'l Investors Fund LLC v. TradingScreen Inc.

Full Text of Court Cases
July 23, 2021

The defendant did not breach its redemption agreement because a committee of directors, “properly engaged in the judgment-laden task of determining the amount of funds that the company could use for redemptions … [and] determined that using a greater amount of cash to redeem more shares threatened the company's ability to continue as a going concern.” As a result, interest on the asserted obligation back to 2013 was not allowed at 13%, the amount per the agreement.