Solar Cells, Inc. v. True North Partners, LLC
Court of Chancery of Delaware
2002 WL 749163
In manager-managed First Solar, LLC, True North's managers (defendants) unilaterally approved merging the company into a wholly True-North-owned entity the day after a full board meeting where they said nothing about the impending deal, faxing notice to the Solar Cells managers (plaintiff) as a done deal set to close in about a week and slashing Solar Cells' ownership stake from 50% to 5% based on a valuation far below prior figures; Solar Cells sought a preliminary injunction, alleging bad faith and a failure to meet the entire-fairness standard.
Whether managers of an LLC who appear to have acted in bad faith in a self-interested transaction bear the burden of demonstrating the transaction's entire fairness.