Katz v. Bregman
Delaware Court of Chancery
431 A.2d 1274 (Del. Ch. 1981)
Plant Industries (defendant), a steel-drum maker, sold off several unprofitable subsidiaries over six months, then its CEO Bregman (defendant) negotiated to sell Plant National (Quebec) Ltd. ("National"), Plant's only consistently profitable division and the source of 34.9% to 52.4% of pre-tax income in recent years, ultimately accounting for 51% of Plant's total assets and 45% of net sales. Plant planned to abandon its historically successful steel-drum business entirely and shift to plastic drums. Despite a higher competing offer from Universal Drum Reconditioning, Plant's board committed to selling National to Vulcan Industrial Packaging. Shareholder Hyman Katz sued to enjoin the sale, arguing it constituted a sale of "substantially all" of Plant's assets requiring a shareholder vote with 20 days' notice under Delaware law.
Whether the sale of substantially all of a corporation's assets requires approval by a majority of the corporation's outstanding shareholders entitled to vote at a meeting called upon at least 20 days' notice.