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DELAWARE CORPORATE Litigation News and Analysis • Legislation • Regulation • Expert Commentary VOLUME 25, ISSUE 25 / JUNE 27, 2011

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DELAWARE CORPORATE Litigation News and Analysis • Legislation • Regulation • Expert Commentary VOLUME 25, ISSUE 25 / JUNE 27, 2011 Westlaw Journal Formerly Andrews Litigation Reporter DELAWARE CORPORATE Litigation News and Analysis • Legislation • Regulation • Expert Commentary VOLUME 25, ISSUE 25 / JUNE 27, 2011 COMMENTARY WHAT’S INSIDE BOOKS & RECORDS 7 Fraud, asset shell game Delaware court refuses to enjoin stockholder suspected at another Chinese company vote on company sale Paul v. China MediaExpress Holdings (Del. Ch.) In an analysis of a recent Delaware Chancery Court ruling, Robert Reder, David Schwartz and Aaron Stine of Milbank, Tweed, Hadley & McCloy say the judge found SHAREHOLDER RIGHTS the “unique characteristics” of Answers Corp.’s business made its directors’ decision 8 Court: Restrictions not to sell — and the disclosures they made about the sale — reasonable. an ‘unreasonable barrier’ SEE PAGE 3 to dissidents Goggin v. Vermillion Inc. (Del. Ch.) BONDHOLDER ACTION 10 Bondholders: Malone took too many liberties with Liberty Media assets Bank of N.Y. Mellon Trust Co. v. Liberty Media Corp. (Del.) DUTY TO CREDITORS 11 ThoughtWorks owes more than ‘whatever it can spare,’ investors say SV Inv. Partners v. ThoughtWorks (Del.) BANKRUPTCY ISSUES/ AUTOMATIC STAY 12 Nortel pension trustee says stay not applicable to U.K. regulator Nortel Networks v. Trustee of Former Hewlett-Packard CEO Mark Hurd REUTERS/Robert Galbraith Nortel Networks UK Pension Plan (3d Cir.) BOOKS & RECORDS BANKRUPTCY ISSUES/ JURISDICTION 13 No jurisdiction over Public curiosity no reason to unseal pre-petition TILA violation claim, bankruptcy judge says confidential letter, ex-HP CEO says In re New Century TRS Holdings (Bankr. D. Del.) In his appeal to Delaware’s highest court, former Hewlett-Packard CEO Mark Hurd has argued that shareholders and a “curious” public have no right to see a “confiden- NEWS IN BRIEF tial” letter concerning his purported sexual relationship with a company contractor that led to his ouster. CONTINUED ON PAGE 6 41066687 TABLE OF CONTENTS Westlaw Journal Delaware Corporate Books & Records: Hurd v Espinoza Published since November 1986 Public curiosity no reason to unseal confidential letter, ex-HP CEO says (Del.) ..............................................1 Publisher: Mary Ellen Fox Commentary: By Robert S. Reder, Esq., David Schwartz, Esq., and Aaron Stine, Esq. Executive Editor: Kevin M. McVeigh Delaware court refuses to enjoin stockholder vote on company sale .............................................................. 3 Production Coordinator: Tricia Gorman Books & Records: Paul v. China MediaExpress Holdings Senior Editor: Frank Reynolds Fraud, asset shell game suspected at another Chinese company (Del. Ch.) .................................................. 7 [email protected] Westlaw Journal Delaware Corprate Shareholder Rights: Goggin v. Vermillion Inc. (ISSN 2155-5869) is published biweekly by Court: Restrictions not an ‘unreasonable barrier’ to dissidents (Del. Ch.) ......................................................8 Andrews Publications, a Thomson Reuters/ West business. Bondholder Action: Bank of N.Y. Mellon Trust Co. v. Liberty Media Corp. Bondholders: Malone took too many liberties with Liberty Media assets (Del.) ........................................... 10 Andrews Publications 175 Strafford Avenue Duty to Creditors: SV Inv. Partners v. ThoughtWorks Building 4, Suite 140 ThoughtWorks owes more than ‘whatever it can spare,’ investors say (Del.) ..................................................11 Wayne, PA 19087 877-595-0449 Bankruptcy Issues/Automatic Stay: Nortel Networks v. Trustee of Nortel Networks UK Pension Plan Fax: 800-220-1640 Nortel pension trustee says stay not applicable to U.K. regulator (3d Cir.) ....................................................12 www.andrewsonline.com Customer service: 800-328-4880 Bankruptcy Issues/Jurisdiction: In re New Century TRS Holdings No jurisdiction over pre-petition TILA violation claim, bankruptcy judge says (Bankr. D. Del.) ....................13 For more information, or to subscribe, please call 800-328-9352 or visit Bankruptcy Issues/Deferred Employee Compensation Plans: In re Washington Mut. west.thomsom.com. WaMu wins bankruptcy fight over employee compensation funds (Bankr. D. Del.) ......................................14 Reproduction Authorization Supreme Court/Class Certification: Erica P. John Fund v. Halliburton Co. Authorization to photocopy items for internal Halliburton securities fraud lawsuit reinstated (U.S.) ......................................................................................15 or personal use, or the internal or personal use by specific clients, is granted by Thomson Securities Fraud: Janus Capital Group v. First Derivative Traders Reuters for libraries or other users regis- Supreme Court limits liability of investment advisers for prospectus content (U.S.) ....................................16 tered with the Copyright Clearance Center (CCC) for a fee to be paid directly to the Supreme Court/’Honest Services’ Fraud: United States v. Black Copyright Clearance Center, 222 Rosewood Conrad Black likely headed back to prison after Supreme Court denies review (U.S.) ..................................17 Drive, Danvers, MA 01923; 978-750-8400; www.copyright.com. News in Brief .....................................................................................................................................................18 How to Find Documents on Westlaw Chancery Court Cases Filed.............................................................................................................................18 The Westlaw number of any opinion or trial filing is listed at the bottom of each article Case and Document Index ...............................................................................................................................19 available. The numbers are configured like this: 2009 WL 000000. Sign in to Westlaw and on the “Welcome to Westlaw” page, type the Westlaw number into the box at the top left that says “Find this document by citation” and click on “Go.” NOT A SUBSCRIBER? Don’t miss out on the excellent litigation news coverage and timely commentaries brought to you by Westlaw Journals. News briefs, agency reports, coverage of new and proposed legislation and regulations, verdict roundups, photos and graphics, and visual aids like lists and charts to highlight key information all come to you with each issue of your subscription. Call us at 800-328-4880 or find us on the store at west.thomson.com by searching “Westlaw Journals” to begin your subscription today. 2 | WESTLAW JOURNAL n DELAWARE CORPORATE © 2011 Thomson Reuters COMMENTARY Delaware court refuses to enjoin stockholder vote on company sale By Robert S. Reder, Esq., David Schwartz, Esq., and Aaron Stine, Esq. Milbank, Tweed, Hadley & McCloy Recently, in In re Answers Corp. Shareholders A SUNNIER FORECAST THE COURT’S ANALYSIS Litigation, No. 6170, 2011 WL 1366780 Undeterred, AFCV raised its offer, this time to The court explained that, to obtain the (Del. Ch. Apr. 11, 2011), the Delaware Court $10.25 per share, again on the “condition of “’extraordinary remedy’ of a preliminary of Chancery cited a company’s “unique exclusivity.” On Nov. 15 the two parties “agreed injunction,” the stockholders bear the burden characteristics” — arising from its challenging to move forward at $10.25 without an exclusivity of demonstrating, among other things, a position within its industry — in assessing agreement, but on the condition that Answers “reasonable probability” of success on the whether its board of directors satisfied its would reimburse AFCV’s expenses if Answers merits. Because the stockholders were fiduciary duties in approving the sale of the agreed to a sale to a different entity at a higher unable to satisfy this requirement, the court company. The court denied a request by price.” With this agreement in hand, Answers stockholders to preliminarily enjoin the sale, refused to enjoin the transaction and allowed reached out to 10 other entities identified as finding no fault with the board’s “reasonable the stockholder vote to proceed. potential purchasers. Of these, three entered decision” to approve the sale or the related Price and process claims into confidentiality agreements but none made disclosures made in its proxy materials. an offer. Because the transaction involved an all- cash bid that would result in a change in BACKGROUND After Answers’ management provided it with control of Answers, the court analyzed “new and more optimistic” 2011 forecasts, Answers Corp. provides its clientele with the stockholders’ attack on the adequacy the board asked AFCV to once again increase “answer-based search services in six its offer while discussing the possibility of of the board’s sales process under the languages” through Answers.com. Answers’ remaining independent. AFCV agreed to familiar Revlon standard. Revlon Inc. v. revenues are quite sensitive to changes made increase its offer to $10.50 per share, which MacAndrews & Forbes Holdings, 506 A.2d to the algorithms “employed by the various UBS said was fair to Answers’ stockholders. 173 (Del. 1986). search engines, especially Google, that direct users to Answers’ content.” Because these The board accepted this sweetened offer, Under Revlon, a court must “(1) make a algorithms “change unpredictably and for citing “the uncertainty of the 2011 forecasts, determination as to whether the information reasons outside of Answers’ control,” valuing the investments required to remain a stand- relied upon
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