Case Citation
Legal Case Name

Katz v. Bregman Case Brief

Court of Chancery of Delaware1981Docket #1149854
431 A.2d 1274 1981 Del. Ch. LEXIS 449

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Case Brief Summary & Legal Analysis

General Brief
3 min read

tl;dr: A company sought to sell its most profitable subsidiary, which constituted over half its assets. A shareholder sued, and the court enjoined the sale, holding that it was a sale of “substantially all” assets that required shareholder approval under Delaware law.

Legal Significance: This case clarifies that determining a “sale of substantially all assets” under 8 Del. C. § 271 requires both a quantitative and a qualitative analysis, focusing on whether the sale fundamentally alters the corporation’s nature and purpose.

Katz v. Bregman Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

Plant Industries, Inc.’s board of directors, after divesting several unprofitable U.S. subsidiaries, entered into an agreement to sell its Canadian subsidiary, Plant National (Quebec) Ltd. This Canadian division was the company’s sole profitable operation for the preceding four years and its historical core business was manufacturing steel drums, the business conducted by the subsidiary. The board intended to use the proceeds to enter the new business of manufacturing plastic drums. Quantitatively, the Canadian subsidiary constituted 51% of the corporation’s total assets, accounted for 44.9% of its sales revenue, and generated 52.4% of its pretax net operating income. A shareholder, Hyman Katz, filed suit to obtain a preliminary injunction, arguing that the transaction constituted a sale of “substantially all” of the corporation’s assets and therefore required shareholder approval under Delaware statute, which the board had not sought.

Court Holding & Legal Precedent

Issue: Does a corporation’s sale of its most profitable subsidiary, which constitutes over half its assets and represents its primary historical business, qualify as a sale of “substantially all” of its assets requiring shareholder approval under 8 Del. C. § 271?

Yes. The proposed sale of the Canadian subsidiary is a sale of Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia des

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Legal Issue

Does a corporation’s sale of its most profitable subsidiary, which constitutes over half its assets and represents its primary historical business, qualify as a sale of “substantially all” of its assets requiring shareholder approval under 8 Del. C. § 271?

Conclusion

This case establishes that the "substantially all assets" test under Delaware corporate Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud

Legal Rule

Under Delaware law, a sale of assets constitutes a sale of "substantially Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. E

Legal Analysis

The Court of Chancery applied the two-part test articulated in *Gimbel v. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusm

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Flash Summary

  • A sale of “substantially all” assets under 8 Del. C. §
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non

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