Richards Layton & Finger
 

Delaware LLC & Partnership Law Update - November 2010

November 8, 2010

In three recent decisions, the Delaware Court of Chancery addressed important issues in connection with the restructuring of publicly traded alternative entities. The issues addressed included fiduciary duties and the implied contractual covenant of good faith and fair dealing. Each case is discussed below.

Lonergan v. EPE Holdings LLC, C.A. No. 5856-VCL (Del. Ch. Oct. 11, 2010): The Delaware Court of Chancery Discusses the Implied Covenant of Good Faith and Fair Dealing

In a recent opinion, the Delaware Court of Chancery further clarified the role of the implied covenant of good faith and fair dealing in interpreting a limited partnership agreement. This issue is critically important in the area of alternative entities, where partnerships, limited liability companies and statutory trusts are all governed by contracts and these contracts, regardless of fiduciary duty waivers, are all subject to the implied covenant.
Read More >>

In re Inergy L.P. Unitholder Litigation, C.A. No. 5816-VCP (Del. Ch. Oct. 29, 2010): The Delaware Court of Chancery Applies Standards Set Forth in Limited Partnership Agreement of a Delaware Limited Partnership and Declines to Enjoin a Simplification Transaction
In another recent opinion, the Delaware Court of Chancery applied standard Delaware contract interpretation principles to interpret a limited partnership agreement of a Delaware master limited partnership (“MLP”) and permitted a strategically compelling simplification transaction to proceed.
Read More >>

In re Atlas Energy Resources, LLC, Unitholder Litigation, C.A. No. 4589-VCN (Del. Ch. Oct. 28, 2010): The Delaware Court of Chancery Discusses Fiduciary Duties and the Implied Covenant of Good Faith and Fair Dealing in a Case Involving a Publicly Traded Limited Liability Company
In Atlas, the Delaware Court of Chancery considered issues relating to the modification and elimination of fiduciary duties in a limited liability company agreement and the implied covenant of good faith and fair dealing in connection with a challenged merger.
Read More >>