Alderstein v. Wertheimer

Alderstein v. Wertheimer

Del. Ct. Ch.

2002 WL 205865

 

Facts. Alderstein, who was former Chairman and CEO of SpectruMedix Corp. sued the company and the current directors. Prior to the suit on July 9, 2001, a meeting was held in which a board majority issued to a Reich Partnership a number of shares of a new class of supervoting preferred stock that conveyed to the Reich Partnership a majority of the voting power of the Company’s stock. Basically Alderstein sued Wertheimer and Mencher because they did not give notice of a meeting that would result in his removal from his CEO position.

 

Rule. Company’s insolvency doesn’t justify not giving advance notice of a meeting’s agenda.

 

Issue: Did SpectruMedix’s dire financial circumstance and actual or impending insolvency justify directors’ actions in not giving advance notice of meeting to prevent controlling shareholder from exercising rights?

 

Held. No. SpecturMedix’s dire financial situation and impending insolvency does not justify Wertheimer’s and Mencher’s actions. It is such times of dire consequence when the established rules of good board conduct are the most important. Directors cannot accomplish their fiduciary duties to a corporations though trickery and deceit.