In the Matter of the Appraisal of Ford Holdings, Inc. Preferred Stock

698 A.2d 973 (1997)

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In the Matter of the Appraisal of Ford Holdings, Inc. Preferred Stock

Delaware Court of Chancery
698 A.2d 973 (1997)

Facts

A merger of Ford Holdings, Inc. (Holdings) (defendant) with Ford Holdings Capital Corporation entailed cashing out the Holdings preferred stockholders. The Holdings preferred stock came in two classes: cumulative and auction. The terms of the cumulative stock provided that, in the event of a cash-out merger, the stockholders would be paid a predetermined liquidation amount plus unpaid dividends, and no more. The terms of the auction stock alluded to the same predetermined value—a liquidation preference—but in much more ambiguous wording. U.S. Bancorp and Cede & Co. (Bancorp and Cede) (plaintiff) held 100 shares of Holdings auction stock. Following the merger, Bancorp and Cede brought suit for an appraisal under Delaware General Corporation Law (DGCL) § 262. Bancorp and Cede were joined by holders of the cumulative preferred stock (the cumulative preferred stockholders) (plaintiffs). Holdings moved for summary judgment, asserting that the rights associated with both forms of its preferred stock were governed entirely by the contractual terms of the stock.

Rule of Law

Issue

Holding and Reasoning (Allen, J.)

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