The Delaware Court of Chancery, in Skye Mineral Investors, LLC, et al. v. DXS Capital (US), Ltd., et al. and Skye Mineral Partners, LLC, C.A. No. 2018-0059-JRS, memo. op. (Del. Ch. Feb. 24, 2020), found it conceivable that minority members of an LLC used contractual blocking rights and other means of negative control in a in a scheme to force an LLC subsidiary into bankruptcy and acquire its assets at a fraction of their worth, in breach of fiduciary duties.
NEW: Morris James discusses the decision in Chancery Allows Fiduciary Duty Claims to Proceed against Minority Members Who Blocked Financings in Order to Bankrupt Company and Facilitate Unfair Asset Purchase.
Fried Frank discusses the decision in Minority Investor “Blocking Rights” May Constitute Control–Skye Mineral.
Stinson discusses the decision in “Sole Discretion” Language in LLC Agreement does not Eliminate Fiduciary Duties.
$$$ Law360 discusses the decision in Chancery Keeps Some Counts In Mining Co. Default Scheme.