Business Divorce Practice
HEGH has developed a niche practice in the area of “Business Divorce” – the legal separation of the owners or managers of privately-held businesses, including closely-held corporations, joint ventures (JVs), limited partnerships (LPs), and limited liability companies (LLCs). HEGH has been involved in some of the leading cases in this area, both as counsel and as a receiver, trustee, or liquidator in cases where the court has ordered dissolution of the business entity. Chambers USA has specifically recognized our Business Divorce practice.
Some of our most notable cases in this area include:
- Pearl City Elevator, Inc. v. Gieseke, 2021 WL 1099230 (Del. Ch.), aff’d, 265 A.3d 995 (Del. 2021). We prevailed after trial in this action to obtain a declaratory judgment under Section 18-110 of the LLC Act that our client had acquired sufficient equity in the subject company to alter its 50/50 governance structure under the operating agreement. The Delaware Supreme Court affirmed the ruling in favor of our client.
- A & J Capital, Inc. v. Law Office of Krug, 2019 WL 367176 (Del. Ch.), aff’d, 222 A.3d 143 (Del. 2019). We prevailed after trial in this action under Section 18-110 of the LLC Act, where the investors in an EB-5 vehicle sought to remove our client as the manager of the LLC for “cause,” on the grounds that the members removed our client without cause and then formulated after-the-fact explanations for removal that were neither credible nor adequate under the operating agreement to justify their actions. The Delaware Supreme Court affirmed the ruling in favor of our client.
- In re Carlisle Etcetera LLC, 114 A.3d 592 (Del. Ch. 2015). HEGH successfully persuaded the Court to dissolve Carlisle Etcetera LLC, a joint venture between Royal Spirit Group of Hong Kong and Tom James Company. This was the first Delaware case to recognize a claim for “equitable dissolution” of LLCs. Summary judgment was granted in our client’s favor, at 2015 WL 2066764.
- Zutrau v. Jansing, 2014 WL 3772859 (Del. Ch.), aff’d, 123 A.3d 938 (Del. 2015) (TABLE), cert. denied, No. 15-811 (U.S.). HEGH was lead counsel for defendant in this case presenting a smorgasbord of business divorce issues. Our client prevailed on most claims after trial. Among other things, the court upheld the reverse stock split that cashed out plaintiff’s interest and refused to dissolve the company. The Delaware Supreme Court subsequently affirmed the Court of Chancery’s rulings.
- Dweck v. Nasser, 2012 WL 161590 (Del. Ch.). HEGH was lead counsel for defendants/counterclaim plaintiffs in this nearly seven-year business divorce dispute between former business partners. The trial took place over five days, and the record included 930 exhibits, deposition testimony from twenty-three fact witnesses and live testimony from six fact witnesses and three expert witnesses. The Court held largely in favor of our client, finding that his former business partner breached her fiduciary duties by establishing competing companies that usurped corporate opportunities and converted company resources, resulting in millions of dollars in damages.
Court of Chancery Practice
Heyman Enerio Gattuso & Hirzel LLP is a Delaware litigation boutique focusing on corporate and commercial matters in the Delaware Courts: the Court of Chancery, the Superior Court, including the Complex Commercial Litigation Division (CCLD), the Delaware Supreme Court, and the United States District Court for the District of Delaware. Many of our attorneys served as law clerks in the Court of Chancery or Superior Court before entering private practice. The Firm prides itself on its extensive trial experience and its proficiency in handling expedited proceedings on behalf of corporate constituents, including directors, officers, special committees, stockholders or creditors, whether as plaintiffs, defendants, neutral parties (including receivers and liquidating trustees) or non-parties to litigation. HEGH assumes lead counsel or Delaware counsel roles, as required by the circumstances of each case.
HEGH’s Court of Chancery litigation practice focuses on fiduciary duties, corporate governance, control contests, partnership and limited liability company disputes, statutory proceedings for advancement and indemnification, books and records inspections, and appraisal proceedings, as well as class and derivative litigation. HEGH has developed niche practices in the areas of “Business Divorce” – the legal separation of the owners of privately held businesses – advancement and indemnification, books and records, and appraisal, and has been involved in some of the leading cases in these areas. HEGH also has experience litigating matters involving trade secrets and restrictive covenants. These matters are often litigated on an expedited basis and seek injunctive relief in the Court of Chancery.
CCLD (Superior Court) Practice
In addition to its Court of Chancery practice, HEGH has established itself as a leader in the Superior Court’s Complex Commercial Litigation Division (the “CCLD”). This specialized division handles commercial disputes exceeding $1 million and provides business litigants prompt trial dates. HEGH has successfully litigated numerous cases in the CCLD, including earnout disputes, disputes arising from merger agreements (such as stock purchase agreements, membership interest purchase agreements and security purchase agreements), breach of commercial contracts, insurance coverage disputes and other indemnification matters. The CCLD’s sophisticated judges expect skilled counsel who can advance cases to trial efficiently, narrow the issues, and present evidence effectively – qualities that HEGH consistently delivers.
Insurance Coverage Defense Practice
HEGH has significant experience in some of the most high-stakes and influential insurance defense disputes in Delaware. These decisions regarding D&O coverage, financial lines, or casualty insurance not only impact its clients’ billion-dollar portfolios, but also the insurance market at large.
Some of our recent successes include:
- In re Verizon Ins. Coverage Appeals, 222 A.3d 566 (Del. 2019). Successfully arguing on appeal that a multi-million dollar judgment should be reversed because a fraudulent transfer action is not a Securities Claim under the policy.
- In re Solera Insurance Coverage Appeals, 240 A.3d 1121 (Del. 2020). Successfully arguing on appeal that a multi-million dollar judgment should be reversed because an appraisal action is not a Securities Claim under the policy.
- First Solar, Inc. v. Nat’l Union Fire Insurance Co. of Pittsburgh, Pa., 274 A.3d 1006 (Del. 2022). Successfully arguing on appeal that dismissal of coverage action should be affirmed because underlying litigation was a related claim under the policy and establishing correct standard of review for relatedness.
- Jarden, LLC v. ACE Am. Ins. Co., 273 A.3d 752 (Del. 2022). Successfully arguing on appeal for affirming dismissal of coverage action because an appraisal action is not for a “Wrongful Act.”
- Stillwater Mining Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 289 A.3d 1274 (Del. 2023). Successfully arguing on appeal that dismissal of coverage action should be affirmed on forum-shopping grounds.
- In re FairPoint Ins. Coverage Appeals, 311 A.3d 760 (Del. 2023). Successfully arguing on appeal that a multi-million dollar judgment should be reversed because a fraudulent transfer action is not a Securities Claim.
Intellectual Property Practice
For more than 20 years, HEGH’s attorneys have successfully served as counsel to clients from around the world in patent disputes in the District Court of Delaware across varied industries, including pharmaceuticals, biotech, medical devices, computer hardware, networking, semiconductors and consumer products. We also represent clients in complex intellectual property disputes involving trade secrets, trademarks, copyrights, unfair competition and antitrust in Delaware’s state and federal courts. As Delaware counsel, we make a concerted effort to know our judges and the jurors who decide our cases to advise our clients and co-counsel throughout the litigation process and bring it to a successful conclusion whether through trial, mediation or a negotiated settlement. HEGH and its IP attorneys have been recognized in “SuperLawyers,” and “Best Lawyers,” by Chambers, and awarded AV ratings by Martindale-Hubbell. Our lawyers also serve on key court and bar organization committees including, among others, the District Court of Delaware’s Local Rules Committee and as Vice Chair of the Chemical and Life Sciences Patent Committee of the American Bar Association.
Special Committee Practice
Special Committee Representation and Advising Experience
Heyman Enerio Gattuso & Hirzel has robust experience advising special committees of independent directors, in both responding to and investigating pre-suit stockholder demands and evaluating strategic alternatives.
Special Litigation and Demand Review Committees
As a litigation boutique, HEGH is well poised to serve as an independent advisor to special committees and our significant experience advising special litigation committees is well known. HEGH has been independent counsel to the special committees of Fortune 100 and 500 companies, public companies and those privately held. HEGH’s engagements by special litigation committees include El Pollo Loco, Walmart, 21st Century Fox and more.
HEGH is experienced in navigating the special committee process from beginning to end, including advising the board in forming special committees and selecting members, evaluating the independence and impartiality of potential members, crafting bespoke and efficient investigation processes, establishing appropriate record-keeping and documentation, navigating the nuanced application of the attorney-client privilege in the boardroom and finalizing recommendations and reports for the board.
Strategic Alternative and Conflicted Transaction Committees
Special Committees play a crucial role in overseeing major transactions, particularly as the MFW framework has become the pivotal determinant as to the scope of review and scrutiny of a board’s actions with respect to the transaction. Navigating major transactions can be complex and challenging for boards of directors, especially when conflicts of interest arise or when there is a need for additional oversight. HEGH has experience structuring the board’s approach to evaluating proposals, selecting and interfacing with an independent financial advisor, conducting due diligence, negotiating terms, and ultimately advising the committee on making recommendations to the full board. HEGH also advised a public company in its selection of an appropriate merger partner and facilitated negotiations that maximized stockholder return.
Stockholder and Investor Practice
HEGH has significant experience litigating high stakes class action and derivative claims for stockholder and investor plaintiffs. In recent years, we have helped recover more than $200 million for investors. Some of our recent successes include the following:
- In re Handy & Harman, Ltd. S’holders Litig., C.A. No. 2017-0882-TMR (Del. Ch.). HEGH served as co-lead counsel in an action alleging that Handy & Harman’s controlling shareholder breached its fiduciary duties to Handy & Harman shareholders when it purchased the remaining shares it did not own for approximately $90 million. The $30 million settlement was one of the largest premiums to deal price in Delaware Court of Chancery history.
- In re Pilgrim’s Pride Corporation Derivate Litig., C.A. 2018-0058-JTL (Del. Ch.). HEGH served as co-lead counsel in a derivative action challenging a conflicted transaction between Pilgrim’s Pride and its controlling shareholder relating to the sale of a poultry processing company headquartered in Northern Ireland. We were able to achieve a $42.5 million settlement as well as substantial corporate governance reforms.
- Witmer v. H.I.G. Capital, L.L.C., C.A. No. 2017-0862-LWW (Del. Ch.). HEGH served as co-lead counsel in this derivative action on behalf of Nominal Defendant Surgery Partners, Inc. asserting breach of fiduciary duty against Defendants H.I.G. Capital, L.L.C.; H.I.G. Surgery Centers, LLC; and H.I.G. Bayside Debt & LBO Fund II (collectively, “HIG”) and aiding and abetting that breach of fiduciary duty against Defendants BCPE Seminole Holdings LP, Bain Capital Investors, LLC and Bain Capital Private Equity , LP. The parties entered into a settlement that resulted in HIG and Bain agreeing to pay a combined $45 million.
- In re Tangoe, Inc. S’holders Litig., C.A. No. 2017-0650-JRS (Del. Ch.). HEGH served as co-lead counsel in this action arising from the sale of Tangoe, Inc. to affiliates of Marlin Equity Partners in a take-private transaction. We obtained a $12.5 million settlement of the litigation.
- Garfield v. BlackRock Mortgage Ventures LLC, C.A. No. 2018-0917-KSJM (Del. Ch.). HEGH served as co-lead counsel in this stockholder class action asserted on behalf of public stockholders of PennyMac Financial Services, Inc. against PennyMac’s largest stockholders, BlackRock and HC Partners, and certain PennyMac directors and officers for breach of fiduciary duty. Settlement created a common fund of $6.85 million for the benefit of approximately 23 million class shares, amounting to a recovery of over $0.29 per share before fees and expenses.
- Sciabacucchi v. Liberty Broadband Corp., C.A. No. 11418-VCG (Del. Ch.). HEGH served as co-lead counsel in this derivative action on behalf of Charter Communications, Inc., asserting breach of fiduciary duty claims against certain current and former members of Charter’s Board, including John Malone, the chairman and controlling stockholder of Charter’s largest stockholder, Liberty Broadband Corporation, for certain share issuances issued in connection with Charter’s acquisitions of Time Warner Cable and Bright House Networks, LLC. We obtained an $87.5 million settlement of the litigation.
Receivership Practice
HEGH has been appointed by the Court or mutually agreed upon by parties to serve as a receiver to manage and oversee the disposition of a company’s assets, wind down its operations and distribute its property. As a receiver, the firm has managed assets for entities in receivership, including preserving and managing assets (like real estate, machinery, intellectual property, inventory, financial accounts and other holdings). HEGH has also assisted with managing litigations within a receivership and winding down a company’s operations. HEGH is well versed in the requisite reporting and compliance function of a receiver and ready to assist with this nuanced, and high-stakes practice.