The Delaware Court of Chancery, in Joseph C. Bamford, et al. v. Penfold, LP, et al., C.A. No. 2019-0005-JTL, memo. op. (Del. Ch. Feb. 28, 2020), found former LLC members allegedly induced to accept non-managerial interests in a holding company in a fraudulent reorganization have double-derivative standing to bring fiduciary duty claims for pre- and post-reorganization self-dealing.
Morris James discusses the decision in Chancery Sustains Breach of Fiduciary Duty Claim Against Long-Time Friend and Financial Advisor, and Addresses Double-Derivative Standing for Alternative Entities.