Barry M. Klayman, left, and Mark E. Felger, right. Courtesy photos

Timely Appeal of Order of Dismissal Warrants Substitution and Further Proceedings by Chapter 7 Trustee

The Supreme Court held that the trustee should be substituted for the nominal defendant and realigned as the plaintiff in the Chancery Action to enable him to pursue the derivative claims previously asserted by the plaintiff in the Chancery Action.

January 12, 2022 at 09:02 AM

8 minute read

Corporate Entities

Barry M. Klayman

Mark E. Felger

In Lenois v. Somers, 2021 WL 5860672 (Del. Dec. 9, 2021), the Supreme Court considered a question of first impression: Whether a Chapter 7 trustee may substitute and realign in place of the nominal defendant corporation to directly pursue the plaintiff's claims after the claims were dismissed on Rule 23.1 demand futility grounds, where the dismissal was the subject of a pending appeal that became moot upon the nominal defendant's bankruptcy filing. The Supreme Court held that the trustee should be substituted for the nominal defendant and realigned as the plaintiff in the Chancery Action to enable him to pursue the derivative claims previously asserted by the plaintiff in the Chancery Action.