This past year, Proskauer’s private fund litigation blog highlighted a Delaware Chancery case adopting an expansive view in favor of parties seeking information from companies under Section 220 of the Delaware General Corporation Law. The Delaware Supreme Court recently affirmed the Chancery Court’s ruling, providing additional appellate guidance on Section 220 and endorsing limits the Chancery Court set on certain defenses companies may have against such requests.
Section 220
“Sue First, Ask Questions Later” Approach to Records Inspection Suits Rejected by Court of Chancery
By James Anderson on
Characterizing the decision to bring a books and records inspection action after filing a plenary or substantive action as “[i]nherently contradictory,” the Delaware Court of Chancery recently dismissed a Section 220 action brought by a group of investors. The decision signals that the Court of Chancery remains alert to the use of books and records inspection actions for improper purposes, including to subvert the ordinary conduct of civil discovery.