Quadrant Structured Prods. Co., Ltd. v. Vertin
Annotate this CasePlaintiff owned debt securities issued by Defendant, a Delaware corporation. Plaintiff sued Defendant, asserting breach of fiduciary duty claims derivatively against Defendant’s board of directors (Board) and Defendant’s controller (Controller). Specifically, Plaintiff alleged that Defendant was insolvent and that the individual defendants, members of the Board, should wind down Defendant’s business and dissolve the company, but instead, the Board had transferred value preferentially to its Controller. Plaintiff also asserted fraudulent transfer claims directly against the Controller and its affiliate. Defendants filed a motion to dismiss the complaint. The Court of Chancery (1) denied the motion to the extent that Plaintiff challenged specific transfers of value to the Controller and its affiliate, as the complaint adequately stated a claim in this regard; and (2) granted the motion to the extent that Plaintiff challenged the Board’s business decision to take on greater risk, as the complaint did not plead facts that would be sufficient to rebut the business judgment rule.
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