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Corporations Keyed to Hazen
Thorpe v. Cerbco, Inc.
Citation:
676 A.2d 436 (Del. 1996)Facts
CERBCO is a holding company with voting control of three subsidiaries. At the relevant time, only one of these subsidiaries, Insituform East, Inc. was profitable. The Ericksons did not inform CERBCO’s outside directors that INA had approached the Ericksons with the intention of buying East from CERBCO, but did inform them of INA’s interest in buying the Ericksons’ stock. On March 12, 1990, the Ericksons and INA signed a letter of intent (LOI) for the sale of the Ericksons’ controlling interest in CERBCO for $6 million. The letter of intent required the Erickons to give INA access to CERBCO’s books and records and required INA to indemnify the Ericksons for any costs associated with litigation arising from the consummation of the proposed transaction. On May 11, 1990, Thorpe lodged a demand with the CERBCO board that the proposed transaction be rejected or that the Ericksons provide an accounting for the control premium associated with the sale of the Class B shares. Thorpe filed suit on August, 1990, contending that the Ericksons had diverted from CERBCO the opportunity to sell East to INA so that the Ericksons could instead sell their control over CERBCO.
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