Stream TV Networks, Inc. v. SeeCubic, Inc.

Summary

The Delaware Supreme Court considered whether a Delaware corporation's Class B stockholders were entitled to vote before the corporation transferred substantially all of its assets to secured creditors under an omnibus restructuring agreement. The Court held that the corporation's charter required approval by a majority of the Class B stockholders, vacated the injunction, reversed the Court of Chancery's declaratory judgment, and remanded for further proceedings.

Holdings

1. The Omnibus Agreement effected an "Asset Transfer" under Stream's Charter and therefore required the affirmative vote or written consent of holders of a majority of the outstanding Class B voting stock.
2. Section 271 did not control interpretation of the Charter's Class Vote Provision because the Charter's definition of Asset Transfer was materially broader than Section 271's reference to a sale, lease, or exchange.
3. There is no surviving Delaware common-law board-only insolvency exception to Section 271; any such exception, assuming it ever existed in Delaware, was superseded by Section 271 and its predecessor.

Questions Presented

1. Whether Stream's Charter required approval by a majority of its Class B stockholders before the Omnibus Agreement could transfer all or substantially all of Stream's assets.
2. Whether the Charter's use of the phrase "other disposition" encompasses the transfer and assignment of Stream's assets to secured creditors in satisfaction of debt.
3. Whether Delaware law recognizes a common-law board-only insolvency exception to the stockholder-approval requirement in 8 Del. C. § 271, and whether any such exception survived enactment of Section 271 and its predecessor.

Disposition

reversed_and_remanded