Quimbee logo with url
From our private database of 14,300+ case briefs...

In re Trados Incorporated Shareholder Litigation

Delaware Court of Chancery
73 A.3d 17 (Del. Ch. 2013)


Facts

TRADOS Inc. (Trados) (defendant) obtained financing from venture capitalists in exchange for preferred stock and control of the board of directors. Despite this, Trados did not do well enough financially to justify the venture capitalists’ additional investment. Rather, the venture capitalists sought to sell their interests in Trados. Trados was not able to obtain outside funding, either. The Trados board adopted a management incentive plan (MIP) that was structured so that once an offered sale price for Trados exceeded the venture capitalists’ liquidation preference, compensation to the preferred stockholders would increase substantially at the expense of common stockholders. The MIP provided that such compensation would be awarded to preferred stockholders even if common stockholders received nothing. SDL plc (SDL) offered $60 million for Trados. The preferred stockholders’ liquidation preference was $57.9 million. The Trados board approved the transaction without adopting a special committee to review it. The preferred stockholders received $52.2 million. The common stockholders received nothing. Without the MIP in place, the common stockholders would have received $2.1 million. Marc Christen (plaintiff), a common stockholder, brought suit in the Delaware Court of Chancery, alleging a breach of the Trados board’s fiduciary duty. At trial, the preferred stockholders presented testimony indicating that the board would not have been able to generate value for the common stockholders’ shares without a merger of some kind.

Rule of Law

Issue

Holding and Reasoning (Laster, J.)

What to do next…

  1. 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 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.

  2. 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. Read more about Quimbee.

Here's why 255,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 14,300 briefs, keyed to 191 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.