Production Resources Group L.L.C. v. NCT Group, Inc.
Delaware Court of Chancery
863 A.2d 772 (2004)
- Written by Philip Glass, JD
Facts
The company charter of the insolvent corporation NCT Group, Inc. (NCT) (debtor) shielded NCT’s directors from stockholder direct claims based on a breach of the fiduciary duty of care. Production Resources Group, L.L.C. (PRG) (creditor) sought to pursue a direct, rather than derivative, claim on NCT for what PRG alleged was NCT’s breach of the fiduciary duty of care. From PRG’s perspective, the exculpatory provision of NCT’s charter could not apply to its claims on the basis that NCT was an insolvent corporation and the clause served to constrain shareholders of a solvent corporation. NCT moved for dismissal, claiming that PRG’s claims were not direct but instead derivative (i.e., indirect) and therefore subject to the exculpatory clause. The Delaware Court of Chancery heard this matter.
Rule of Law
Issue
Holding and Reasoning (Strine, J.)
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