In re Jenzabar, Inc. Derivative LitigationAnnotate this Case
At issue in this case was a trust (“the Raiff Trust”) that had expired under the terms of the trust instrument that established the trust. The trust was funded with shares of Jenzabar, Inc. At the time of this litigation, the Raiff Trust continued to hold shares of Jenzabar stock on behalf of its beneficiary. Plaintiff, trustee of a trust holding stock in Jenzabar, brought derivative claims related to a bonus payment for Jenzabar’s CEO and Chairman. The Raiff Trust moved to intervene in the litigation. Defendants filed a motion to dismiss, arguing that the trust lacked the capacity to prosecute this action on behalf of Jenzabar because it had no beneficial or economic interest in Jenzabar. The Court of Chancery granted Defendants’ motion to dismiss, holding that the trust could take only actions related to preserving its assets for purposes of distribution and wind-up, together with those actions for which the trust instrument specifically provided, which did not include the maintenance of the derivative litigation contemplated in this action.