Steam TV Networks, Inc. v. SeeCubic, Inc.Annotate this Case
The Delaware Supreme Court addressed whether approval of a corporation’s Class B stockholders was required to transfer pledged assets to secured creditors in connection with what was, in essence, a privately structured foreclosure transaction. Stream TV Network, Inc. (“Stream” or the “Company”), along with Mathu and Raja Rajan, argued that the agreement authorizing the secured creditors to transfer Stream’s pledged assets (the “Omnibus Agreement”) was invalid because Stream’s unambiguous certificate of incorporation (“Charter”) required the approval of Stream’s Class B stockholders. Stream’s Charter required a majority vote of Class B stockholders for any “sale, lease or other disposition of all or substantially all of the assets or intellectual property of the company.” Stream argued the trial court erred by applying a common law insolvency exception to Section 271 in interpreting the Charter, and that the enactment of 8 Del. C. 271 and its predecessor superseded any common law exceptions. It contended that, in any event, such a “board only” common law exception never existed in Delaware.
SeeCubic, Inc. argued the court correctly found that neither the Charter, nor Section 271, required approval of the Class B shares to effectuate the Omnibus Agreement. Because the Supreme Court agreed that a majority vote of Class B stockholders was required under Stream’s charter, it vacated the injunction, reversed the declaratory judgment, and remanded for further proceedings.