TDR Wins TRO in Federal Court in Corporate Governance Dispute
August 16, 2016
TDR partners Caesar Tabet, Daniel Stanner, and John Fitzgerald, and TDR associate Uri Abt successfully represented a minority owner of a Delaware Limited Liability Company. The controlling members planned to sell the assets of the company and then to file for Chapter 11 bankruptcy. The controlling members scheduled a shareholder meeting to approve that transaction.
The minority owner requested information regarding the proposed action. The controlling members refused that request. They attempted to dismiss the minority shareholder's concerns by claiming that the bankruptcy was in the best interests of the minority owner because it would save him from further liability. The controlling members then expedited the date for the shareholder meeting to vote on the proposal.
TDR filed an arbitration with the American Arbitration Association to resolve the dispute as required by the Operating Agreement. TDR then filed an action in the US District Court for the District of Arizona seeking a temporary restraining order to preserve the status quo pending arbitration. The District Court granted the temporary restraining order prohibiting the company from entering into the stalking horse agreement or from filing for bankruptcy. In securing the temporary restraining order, TDR was able to preserve the minority owner's rights to full information, an informed vote, and a meaningful dispute resolution process.
TDR often represents minority shareholders in corporate governance and shareholder oppression lawsuits and, as in this case, TDR obtains victories in litigation and successfully obtains emergency injunctive relief when necessary to accomplish our clients’ goals.