example, the environment or certain
artistic or religious interests. And in
a bankruptcy case of a public benefit
corporation, who would argue for the
public benefit or materially affected
constituencies? Would 8 Del. C. § 365(b)
foreclose any standing by, say, an
employee group representing those
who might lose their jobs if certain
action is taken in the bankruptcy case?
Section 1102 of the Bankruptcy Code
allows for the formation of creditor
committees and equity security holders’
committees to act in bankruptcy
cases, but does not mention any
other types of committees. It seems
that the public benefit laws at least
offer the chance for a conscientious
board of directors or shareholder
group to act for reasons other than
monetary gain, but if they do not, there
may be little chance of a remedy.
A couple of years ago, the author was
involved in a competing-bid 363 sale of
a business’ assets in a Chapter 11 case.
The winning bidder with the highest
monetary bid was a local company that
proposed to keep the debtor’s business
Steve A. Peirce is a senior counsel in the San
Antonio, Texas, office of Fulbright & Jaworski
LLP. He is board certified in business bankruptcy
law by the Texas Board of Legal Specialization.
Peirce can be reached at steve.peirce@
nortonrosefulbright.com or 210-270-7179.
open and hire all the employees,
even giving them substantial raises.
Everyone was happy with the result.
But what if that local bid had been
second-highest, with the highest
bidder being a foreign competitor who
just wanted to buy the business to
shut it down? Would a public benefit
corporation status for that debtor,
along with a designated benefit to
provide local jobs, have carried the
day for the local bidder? Could the
local bidder have intentionally low-
balled the offer, thinking that it would
get the deal anyway because it would
provide local jobs? Perhaps the practice
point here is that a sale procedures
order could be drafted to require
that any approval of bids must take
into account the designated public
benefits, in addition to the bid price.
With the advent of public benefit
corporations, the priorities of the various
corporate stakeholders get a little more
complicated, and it will be interesting
to see how the courts sort this out. J
1Dodge v. Ford Motor Co., 170 N. W. 668, 684
(Mich. 1919)(“A business corporation is organized
and carried on primarily for the profit of the
stockholders. The powers of the directors are
to be employed for that end.”); Katz v. Oak
Indus. Inc., 508 A.2d 873, 879 (Del. Ch. 1986)
(“It is the obligation of directors to attempt,
within the law, to maximize the long-run
interests of the corporation’s stockholders.”).
2See generally William H. Clark Jr. and Elizabeth
K. Babson, “How Benefit Corporations
Are Redefining the Purpose of Business
Corporations,” 38 Wm. Mitchell L. Rev. 817 (2012);
see also Gary Schildhorn and Brya Keilson,
“The Unresolved Dilemma of Creditors’ vs.
Stakeholders’ Rights,” 32-4 ABIJ 58 (May 2013).
3 They include Arizona, Arkansas, California,
the District of Columbia, Hawaii, Illinois,
Louisiana, Maryland, Massachusetts, New
Jersey, New York, Pennsylvania, South
Carolina, Vermont, and Virginia.
48 Del. C. § 361.
58 Del. C. § 362(a).
68 Del. C. § 362(a); see also 8 Del. C.
§ 365(a) for similar language.
78 Del. C. § 362(a).
88 Del. C. § 362(b).
98 Del. C. § 366(b).
108 Del. C. § 366(c).
118 Del. C. § 365(a).
128 Del. C. § 365(b).
138 Del. C. § 367.
14See Clark and Babson at 849 (discussing
the concept of an injunctive “benefit
158 Del. C. § 365(b).
168 Del. C. § 365(c).
17 N. Am. Catholic Educ. Programming Found.,
Inc. v. Gheewalla, 930 A.2d 92, 101 (Del. 2007).
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