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News
June 11, 2014

ILR’s Efforts Delay Delaware Bill Prohibiting Company ‘Fee-Shifting’ By-Laws

The Wilmington, Delaware News Journal reports that, “Opposition from the U.S. Chamber of Commerce was enough to delay debate on Delaware legislation written by the corporate section of the state bar association that would prohibit companies from making stockholders pay their legal bills if they file lawsuits against the company and lose.”

Yesterday, we reported that the News Journal highlighted the letter sent by ILR to Delaware legislators opposing the legislation.

Today, the newspaper reports that ILR, “came out forcefully against the legislation, saying in two letters to state lawmakers that the bill would only protect frivolous lawsuits intended to ‘line the pockets of the plaintiffs’ trial bar at the expense of national and Delaware companies and their shareholders.'”

The paper also notes that, “more than 90 percent of corporate merger deals valued over $100 million were challenged in court last year.”

After ILR came out in opposition to the bill, “Sen. Bryan Townsend, D-Newark, the legislation’s sponsor, said he intends to set the bill aside… to hear out concerns from businesses.”

ILR’s opposition to the legislation also was highlighted in these stories:

“The Delaware Supreme Court’s ATP decision gives corporations a way to protect their shareholders against these costs of abusive litigation,” said ILR President Lisa A. Rickard, in a letter to lawmakers. “Why would the Legislature so quickly deprive shareholders of the opportunity to obtain that protection?” (Reuters)

The legislation is, “deceptively couched in shareholder limited-liability terms in order to conceal its real purpose,” said ILR’s Matt Webb. (Forbes)

The proposed legislation, “takes away a new tool authorized by the Delaware courts … which businesses could use to reduce the amount of unnecessary litigation that accompanies corporate mergers,” wrote ILR’s Andrew Wynne in a letter to legislators. (WSJ Law Blog)

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