Corporate stock prices can plummet when a company faces a crisis. Suppose the crisis results in a change of ownership via a merger at a significantly reduced share price. Does that mean that ownership of derivative claims is ended for the persons who held the now terminated stock of the troubled company? In a recent post, Alison Frankel explains why the Delaware Supreme Court may soon answer the question in response to a query from the 9th Circuit. The article also notes and explains some tea leaves suggesting the court may rule the derivative claims are not terminated. The ruling should matter to companies that are in truly risky industries or that face exposure to mass litigation arising from securities fraud, torts, or other events.
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