SV INVESTMENT PARTNERS, LLC, SCHRODER VENTURES US FUND L.P. 1, SCHRODER VENTURES US FUND L.P. 2, SITCO NOMINEES, LTD. VC 04001, and SV (NOMINEES) LIMITED, Plaintiffs, v. THOUGHTWORKS, INC., Defendant., 7 A.3d 973

Summary

The CI granted preferred shareholders the right to redeem their stock for cash out of "any funds legally available therefor." Plaintiffs argued that "funds legally available" meant "surplus," and presented an expert who opined that defendant had a surplus sufficient to redeem all the preferred stock. The court held that "funds legally available" was not equivalent to "surplus," but meant cash that was "available" (cash on hand or readily accessible through sales or borrowing) and that could be deployed "legally" for redemptions without violating Del. Code Ann. tit. 8, § 160 or other statutory or common law restrictions, including the requirement that the corporation be able to continue as a going concern and not be rendered insolvent by the distribution. Plaintiffs failed to prove that defendant's board of directors (i) acted in bad faith in determining whether defendant had legally available funds, (ii) relied on methods and data that were unreliable, or (iii) made determinations so ...