Global Capital Partners LLC and Access Management, S.A.S., Inc. v. Green Sapphire Holdings, Inc.; Alpha Carta, Ltd. v. Green Sapphire Holdings, Inc. and Global Capital Partners, LLC

Summary

This post-trial opinion from the Delaware Court of Chancery concerns a $10 million loan secured by equity in a subsidiary that owned real estate in St. Barthélemy. The court held that the lender acquired the subsidiary shares through a settlement, ordered the borrower to stop interfering with the lender's ownership and control, and awarded €3 million in damages. The court rejected fraudulent-transfer claims asserted by an intervening entity, awarded litigation expenses based on bad-faith conduct, and equitably subordinated that entity's loans to the lender's recovery.

Holdings

1. The Court of Chancery had subject-matter jurisdiction because the complaint made a bona fide request for equitable relief and money damages would not provide a complete, practical, and efficient remedy for the loss of the bargained-for security and control of unique real-estate assets.
2. The Island Subsidiary was not an indispensable party, and the court could order the Delaware corporation before it to take actions concerning the foreign properties and subsidiary.
3. The Loan Agreement, its modifications, and the Settlement Agreement were valid and enforceable contracts binding Green Sapphire.
4. Green Sapphire breached the Settlement Agreement, and Global Capital Partners owns the Subsidiary Shares; the Subsidiary owns the Properties.
5. Specific performance and related equitable relief were warranted to protect the lender's ownership and control of the subsidiary shares and properties.
6. Alpha Carta could not assert fraudulent-transfer claims because it was not a bona fide creditor of Green Sapphire; it was an equity investor attempting to characterize equity investments as loans.
7. Global Capital Partners was entitled to €3 million in damages and recovery of its expenses, including attorneys' fees, based on the borrower's and Alpha's bad-faith litigation conduct; Alpha's loans were equitably subordinated to the lender's recovery.

Questions Presented

1. Whether the Court of Chancery had subject-matter jurisdiction based on the plaintiffs' request for injunctive and specific-performance relief.
2. Whether the Island Subsidiary was an indispensable party and whether the court could grant relief concerning real property located outside Delaware.
3. Whether the Loan Agreement and Settlement Agreement were valid and enforceable despite challenges to Cicoski's authority, the borrower's board-majority requirement, and alleged violations of Wyoming trust law.
4. Whether the Settlement Agreement transferred the subsidiary shares and required Green Sapphire to recognize and facilitate the lender's control of the subsidiary and properties.
5. Whether Global Capital Partners was entitled to specific performance, damages, fees, and expenses for Green Sapphire's breach.
6. Whether Alpha Carta was a bona fide creditor entitled to assert fraudulent-transfer claims against the borrower and lender.
7. Whether Alpha Carta's claims should be equitably subordinated and whether the borrower and Alpha engaged in bad-faith litigation conduct.

Disposition

other