Creditors as 'Real Party in Interest' to Prosecute Section 225 Litigation
In the latest installment of a long-running dispute, Vice Chancellor J. Travis Laster recently issued a memorandum opinion denying a motion to dismiss and granting a partial motion for summary judgment in expedited proceedings pursuant to Section 225 of the Delaware General Corporation Law in Hawk Investment Holdings v. Stream TV Networks.
December 14, 2022 at 09:00 AM
6 minute read
ContributorsIn the latest installment of a long-running dispute, Vice Chancellor J. Travis Laster recently issued a memorandum opinion denying a motion to dismiss and granting a partial motion for summary judgment in expedited proceedings pursuant to Section 225 of the Delaware General Corporation Law in Hawk Investment Holdings v. Stream TV Networks, C.A. No. 2022-0930-JTL (Del. Ch. Nov. 29, 2022). As discussed below, one of the defendants' primary challenges to the plaintiff's claims was their argument that Hawk, a secured creditor of Stream TV, was not a real party in interest, and therefore was without standing to bring this action seeking court-confirmation of its actions (taken pursuant to a series of interrelated lending documents and pledge agreements) in voting the equity of Stream TV to elect a sole member to the board of directors of Stream TV's subsidiary, Technowave Media, Inc. Stream TV also moved for dismissal pursuant to Delaware Court of Chancery Rule 12(b)(6), asserting several theories including disputing that the loan agreements with Hawk were valid or whether a default had occurred such that Hawk would have had the contractual right to vote the equity of Stream TV to elect a director to Technowave's board. Hawk countered by arguing that such matters had been resolved against Stream TV in prior proceedings.
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