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Corporate Governance

Corporate Governance

Corporate governance is a phrase that has recently received much attention among institutional investors.  For the attorneys in Chitwood's New York office, however, corporate governance has been a focus for the past 20 years.  Corporate governance lawsuits are actions brought by persons or entities that currently hold shares of a company’s stock, in an effort to prevent or remedy an action that will injure or has injured the corporation or its shareholders, or to bring about corporate change that will improve the company.  Corporate governance litigation includes a wide variety of shareholder actions, from derivative claims seeking to enforce a right of the corporation, and class actions seeking to remedy unfair dilution of the interests of public shareholders, to declaratory or injunctive actions to vindicate the right of shareholders to nominate, vote for, and elect directors.  These actions all have one thing in common - they increase shareholder value in a particular company.

For example, in In re M&F Worldwide Corp. Shareholder Litigation, Ronald Perelman, who owned 35% of the stock of M&F Worldwide Corp., a licorice company whose management team Perelman controlled, caused the company to purchase his 80% stake in Panavision, a highly leveraged movie camera manufacturer.  Chitwood attorneys served as lead counsel for several of M&F Worldwide shareholders who challenged the transaction, alleging that their company paid much too much for the Panavision stock and that the stock of public shareholders was unfairly diluted by the transaction.  At the conclusion of the trial, but before ruling by the court, the Defendants settled for all of the relief that the plaintiffs sought - the complete rescission of the transaction.  As a result of the settlement, the market price of the stock of M&F Worldwide went from approximately $3 per share - the point at which it had settled when Perelman announced the transaction - to almost $14 per share within a year of the rescission of the transaction.

Chitwood attorneys have also participated as lead counsel in the establishment of a score of important precedents in corporate governance cases.  A leading treatise in corporate law, The Business Judgment Rule, et al. (5th Ed.), p. 379, identified two Delaware corporate law decisions litigated by Chitwood attorneys as the most significant Delaware corporate law decisions defining the fiduciary duties of controlling shareholders in the past 20 years.