TransPerfect Global, Inc. will be auctioned off to resolve a dispute between its co-owners. The Delaware Supreme Court made the ruling today. By doing so, the court denied a challenge to a judge’s decision to force the sale of the company.
The Delaware Supreme Court said the original judge made a sound decision. The judge had full authority to force the sale of the tech firm. According to Forbes, the court said:
“The trial record amply supports the Court of Chancery’s finding that the deadlock and dysfunction between the founders is causing threatened and actual irreparable injury to the [company],” Justice Collins J. Seitz, Jr., wrote in the majority opinion. “The Court of Chancery gave the parties every opportunity to resolve their acrimonious dispute outside the courthouse,” he wrote.
The company’s co-CEOs Phil Shawe and Liz Elting argued and fostered a bad company environment. Also, some TransPerfect officials wanted the Delaware politicians to alter state law regarding business sales.
The Court said it would not go against the original judge’s decision. That decision stated that the co-CEOs dispute required a sale. The court ruled 4-1 in favor. Justice Karen Valihura cast the dissenting vote. She said the judge could have taken other measures instead.
The case was the strangest corporate-governance case to end up in Delaware courts. Delaware is home to many publicly-traded companies. That includes over 60 percent of Fortune 500 companies.
“This was exactly the ruling that should have been made in this case,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “To rule otherwise would have upended decades of well-established corporate law.”
Shawe called the court decision unfair. The court forced the sale. Thus, Shawe promised to appeal to the U.S. Supreme Court.
“We are most gratified by the Supreme Court’s decisions today, which deliver to Ms. Elting the result to which she is entitled,” Phil Kaufman, an attorney for Elting, said in an e-mailed statement.
In addition, Harvard law professor Alan Dershowitz, who assisted Shawe’s mother with the case, plans to take the case further in the appeals process.
TransPerfect Co-CEOs Fought Over Business Decisions
Elting and Shawe founded TransPerfect with Shawe while at New York University. The company grosses more than $500 million in annual sales.
Eventually, the pair fought over business decisions. Both wanted to run the company as the leader.
Elting filed a petition in 2014 to break up the partnership. Shawe and his mother, Shirley, who holds a minority stake in the company, disagreed.
Furthermore, company employees got involved soon after. The employees played TV ads, sent mailings, and talked to politicians to change forced business sale laws. They feared for their jobs. As a result, they wanted a three-year waiting period before a forced sale could occur.
Plus, citizens groups lobbied the state’s General Assembly, too. This included Chris Coffey’s organization Citizens for Pro-Business Delaware.
“Now more than ever, we need the legislature to step in and pass a three-year waiting period so that this tragedy is not codified into law, and so we give a lifeline to the thousands of families impacted by this ruling,” Coffey said.
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