The Court of Chancery has has ruled that a no-action clause does not apply to eight of 10 claims it had dismissed with prejudice last year in a lawsuit filed against a Delaware corporation by an entity that acquired notes previously owned by the corporation. Vice Chancellor J. Travis Laster had initially dismissed the plaintiff’s claims, saying the indenture’s no-action clause prevented the defendant from being sued and he cited two previous Chancery Court decisions in which lawsuits were dismissed at the pleading stage because of no-action clauses. However, the Supreme Court had remanded the case back to Laster to determine if, under New York law, the no-action clauses in the current case were different from the no-action clauses in the two previous Chancery Court decisions cited by Laster.
Laster issued the 57-page decision, identified as a “Report Pursuant to Rule 19(c) of the Delaware Supreme Court,” in Quadrant Structured Products v. Vertin.
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