Response to Proposal for Revised Management of Dell Appraisal Case
The comments some of you have offered on the proposals presented in
last week’s motion by petitioners managed by Magnetar Capital,
and on the preliminary summary of the issues they raised,
have been very helpful in defining the interests of Dell investors
with unchallenged appraisal rights.
We will be asking counsel for the Cavan petitioner to present these
interests for the court’s consideration, and will appreciate your
further comments on the following points and any additional concerns
to refine what we report.
Reliance upon counsel representing challenged petitioners:
The lawyers engaged to represent the petitioners managed by T.
Rowe Price have a primary duty to serve those client interests. As
indicated in the Magnetar motion and previous Forum reports,
the recently discovered eligibility issues of the T. Rowe Price
petitioners make their interests different from – and possibly
opposed to – the interests of claimants with unchallenged
appraisal rights. Counsel for the T. Rowe Price petitioners should
therefore not be expected to also serve the unchallenged claimants
as contemplated in their appointment as “Lead Counsel” prior to
the disclosure of conflicting interests.
Proposal of “Co-Lead Counsel” arrangement:
Questions have been raised about the need to create a new
“Co-Lead” arrangement rather than simply appoint a substituted
Lead Counsel to perform the duties that are defined by the court’s
existing Consolidation Order. The provisions of that Order already
support the active involvement of any petitioner’s counsel, so
that substitution of a new Lead Counsel would allow counsel for
the T. Rowe Price petitioners to participate as much as they could
in the role of a newly defined “Co-Lead Counsel.” The simpler form
of leadership may also be more efficient, of course, in terms of
orderly progress as well as costs.
Proposal to establish “Co-Lead Petitioners,” generally:
Nothing could be found in the existing Consolidation Order, or in
the statute establishing appraisal rights,
that provides for an official “lead” designation for petitioners.
Whether permissible or not, the motion did not explain how the
creation of this legal position would benefit the process or the
interests of claimants. Many Forum participants, it should be
noted, believe they can rely upon Delaware’s appraisal of fair
value partly because of the well-tested rules for an orderly court
proceeding that provides rights for all petitioners to be heard.
Revisions to allow management of the process like a securities
class action would raise concerns about ultimate investor
interests in their commitments of long term capital to corporate
Consideration of candidate if court establishes “Lead Petitioner”
If the court decides to create authority for the proposed “Co-Lead
Petitioners” or a single “Lead Petitioner,” it is assumed that any
appointment would be subject to determining whether a candidate
has any relationships with Dell or its private equity investors,
or any direct or derivative interests in Dell’s debt securities.
It is also assumed that the court would define a process for
participation in a review by other petitioners whose rights would
necessarily be conceded to the “Lead Petitioner.”
Simply stated, it appears that the existing Lead Counsel (a) has
duties that conflict with the interests of unchallenged claimants and
(b) has not been voluntarily providing information as expected of
either a Lead Counsel or an officer of the court. We should of course
rely upon the court to decide how this can be most effectively
resolved, but for the court to do so investors must satisfy their
responsibilities to inform the court of their interests.
August 25, 2015
Chairman, The Shareholder Forum
Madison Avenue, New York, New York 10022