Marciano v. Nakash
Supreme Court of Delaware
535 A.2d 400 (1987)
Gasoline, Ltd. was a Delaware corporation, owned in equal parts by the Nakash family (plaintiffs) and the Marciano family (defendants). Gasoline was placed in custodial status because of a deadlock among its board of directors. The Nakashes made $2.5 million in loans to Gasoline. It is undisputed that these were not disinterested transactions. Because of the deadlock, the transactions did not receive majority approval from the directors or shareholders. The Court of Chancery validated the Nakashes’ claims in Gasoline’s liquidation proceedings, finding that the loans were valid and enforceable debts of Gasoline, despite originating from self-dealing transactions. The Marcianos argued that the loan transactions are voidable regardless of their fairness or the good faith of their participants, and that the Nakashes nonetheless failed to meet their burden of establishing fairness.
Rule of Law
Holding and Reasoning (Walsh, J.)