A trustee cannot pursue derivative litigation on behalf of an expired trust owning corporate stock because the instrument creating the trust did not authorize such actions, the Delaware Court of Chancery has ruled. The court’s opinion dismissed a trustee’s efforts to continue a derivative lawsuit against a Massachusetts educational software company.
“Upon termination of the … trust in 2002, the powers of the trustee were confined to those necessary to preserve the trust assets pending distribution, as well as any other powers explicitly provided in the pertinent trust instrument,” said Vice Chancellor Sam Glasscock III in In re Jenzabar Derivative Litigation. “The trust instrument here, however, does not authorize the trustee to bring the type of litigation now pending.”
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