On Nov. 5, Delaware Court of Chancery Vice Chancellor J. Travis Laster issued a decision in In re Kinder Morgan Corporate Reorganization Litigation, C.A. No. 10093-VCL (Del. Ch. 2014), that reminds practitioners that attention to the technical requirements of relevant business entities remains a key tenet of Delaware practice. Moreover, while the Chancery Court is famous as the hub of substantive fiduciary analysis, particularly for shareholder suits involving large, publicly traded C corporations, the court retains its traditional focus on the formal boundaries arising from the Delaware statutes, including those regarding alternative business entities.

The decision arises from an effort by Kinder Morgan Inc. to simplify its admittedly complex organizational structure. The specific transaction at issue, one of several undertaken in tandem by Kinder Morgan, was an agreement and plan of merger that called for Kinder Morgan Energy Partners, a Delaware limited partnership with publicly traded units, to merge with a wholly owned subsidiary of Kinder Morgan, which controls KMEP through sole ownership of its general partner and a substantial interest in KMEP’s limited partner units. After the merger, KMEP would remain the surviving legal entity and a wholly owned subsidiary of Kinder Morgan. Limited partner units in KMEP would be converted into the right to receive, at the election of the holder, cash, shares of Kinder Morgan common stock, or a mix of cash and stock.

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