DELAWARE SUPREME COURT REQUIRES STOCKHOLDER VOTE TO APPROVE COMPANY’S TRANSFER OF PLEDGED ASSETS TO SATISFY DEFAULTED DEBT
Robert S. Reder | 76 Vand. L. Rev. En Banc 101 | Stream TV Networks, Inc. (“Stream” or the “Company”), a company in difficult financial straits, found itself unable to repay its considerable debt. Repayment of this debt was secured by a pledge of all Company assets to the secured creditors. Facing default and a potential bankruptcy that would wipe out the Company’s equity, an independent committee of the Company’s board of directors (the “Board”) approved an agreement transferring the pledged assets to a new entity controlled by the secured creditors. In consideration of this transfer, the secured creditors both (i) waived their rights under the defaulted debt, and (ii) granted Company stockholders an equity interest in the new entity.