The Delaware court of Chancery gets serious about stockholder meetings

On Nov 29, 2006, the Delaware Court of Chancery issued its decision in Esopus Creek Value LP v Hauf, in which Vice Chancellor Stephen P. Lamb addressed three important issues. First, he reaffirmed the consistent line of Delaware cases holding that a corporation's inability to solicit proxies under the federal securities laws does not excuse compliance with stockholder voting requirements imposed by the Delaware General Corporation Law (DGCL). Second, he articulated a key distinction in the test that is used by Delaware courts to evaluate actions that interfere with the stockholder franchise. Third, he discussed sua sponte the availability of Section 322 of the DGCL, which permits the Court of Chancery to appoint a receiver for a solvent corporation when and if a corporation refuses, fails, or neglects to obey any order of any Delaware court. Attorneys advising corporations that are going through this often lengthy process should be mindful that the corporation must continue to comply with its Delaware law obligations.