From our private database of 28,700+ case briefs...
Broad v. Rockwell International Corp.
United States Court of Appeals for the Fifth Circuit
642 F.2d 929 (1981)
Collins Radio Co. (Collins) (defendant) issued and sold interest-bearing debentures with an aggregate principal of $40 million. Each debenture was convertible to Collins common stock at an exchange rate of one share of stock per $72.50 in debenture principal. The indenture provided that in the event of a merger, the surviving entity would assume Collins’s obligations with respect to the indenture and execute a supplemental indenture. The merger provision also stated that the Collins debenture holders would be entitled to convert their outstanding debentures to whatever the debenture holders would have received had they exercised their conversion rights immediately prior to the merger. At the date of issuance, the common stock was trading at $60 per share. But Collins’s financial fortunes declined, and the stock fell to as low as $9.75 per share. Rockwell International Corp. (Rockwell) (defendant) acquired Collins in a cash merger in which holders of Collins common stock tendered their shares or were bought out for $25 per share, after which the stock ceased to exist. As the surviving entity, Rockwell duly executed a supplemental indenture outlining the debenture holders’ right to exchange their debentures for cash at a conversion value of $25 per share of the Collins common stock at the exchange rate of $72.50 in principal—the same price to which the debenture holders would have been entitled in a pre-merger conversion. David Broad (plaintiff) brought a breach-of-contract claim against Rockwell; Collins; controlling parties of both entities (defendants); and the indenture trustee, the United States Trust Company of New York (defendant). Broad argued that the debentures’ conversion feature had been arbitrarily liquidated without compensation or permission. The court granted a directed verdict in favor of Rockwell and the associated parties. Broad appealed. The United States Court of Appeals for the Fifth Circuit granted certiorari.
Rule of Law
Holding and Reasoning (Randall, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 546,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 546,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 28,700 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.