February 13, 2017 / 10:51 PM / 6 months ago

Top Delaware court upholds sale of translation firm TransPerfect

WILMINGTON, Del. (Reuters) - A Delaware judge had the authority to order the sale of TransPerfect Global Inc, a leading translation business, over the opposition of a co-owner, the Delaware Supreme Court ruled on Monday in an unusually heated boardroom battle.

Co-owners Elizabeth Elting and Philip Shawe built TransPerfect into one of the world's largest language services firms, but their once-romantic relationship deteriorated after they formed the company in their college dorm in the 1990s.

Corporate decision-making eventually ground to a halt and the warring co-owners turned to the courts to break the deadlock. In 2015, Chancellor Andre Bouchard of the Court of Chancery ordered the company sold, and Shawe appealed.

Monday's 4-1 ruling affirmed Bouchard's decision. Most of the 68-page ruling and dissent focused on whether Delaware law grants a judge the authority to order a sale. The majority said it does and noted that it was a better outcome than a liquidation.

"Selling TPG (TransPerfect Global) as a going concern will protect TPG’s employees from the ruinous consequences of an asset sale and provide the maximum return to the stockholders," said the majority opinion, written by Collins Seitz.

Shawe has argued the outcome amounted to an unconstitutional taking of property and he said in a statement that he would appeal to the U.S. Supreme Court.

"No proprietor of a Delaware incorporated business can sleep easy with the specter than the courts may just decide to take it, and give to another private citizen," he said.

Elting's lawyer, Phil Kaufman of Kramer Levin Naftalis & Frankel, said in a statement he was gratified by the ruling.

The TransPerfect case has attracted more attention than most battles over private companies, partly because of the behavior of the co-owners, which Bouchard described as "bizarre" and "inexplicable."

Bouchard had penalized Shawe for breaking into Elting's office on New Year's Eve to swipe from her computer emails to her lawyers, and for the loss of text messages on an iPhone. Shawe's assistant discarded the phone, saying he feared it was contaminated by rat droppings.

The Delaware Supreme Court upheld $7 million of sanctions against Shawe.

TransPerfect employees launched Citizens for a Pro-Business Delaware to lobby lawmakers to change the law that permitted the company's sale.

"This is a sad day for justice in Delaware," said Chris Coffey, the campaign's manager. "Nothing will hurt employees more than losing their jobs, and that's what this court order practically guarantees."

Reporting by Tom Hals in Wilmington, Delaware; Editing by Jonathan Oatis

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