Related Practices
Delaware Court of Chancery Prohibits a Financially Healthy Company From Agreeing to Sell Substantially All Of Its Assets Through a Bankruptcy Filing Without Approval of the Company's Common Stockholders Under 8 Del. C. § 271(a)
William M. Lafferty, Gregory W. Werkheiser
December 12, 2006
In Esopus Creek Value LP v. Hauf, No. 2487-N (Del. Ch. Nov. 29, 2006), the Delaware Court of Chancery prohibited a financially healthy corporation, which had not yet filed for bankruptcy protection, from proceeding with an agreement to sell substantially all of its assets under Section 363 of Chapter 11 of Title 11 of the United States Code the “Bankruptcy Code”) without first obtaining approval of the corporation’s common stockholders pursuant to Section 271(a) of the Delaware General Corporation Law (“DGCL”).