In a Memorandum Opinion dated November 18, 2020, Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery denied the motions filed by GPB Capital Holdings, LLC (“GPB”) and its affiliated individuals to dismiss the derivative suit brought on behalf of two clients of Wolf Popper LLP against them.
In the words of the Court, the complaint described how the defendants had “looted [GPB’s] constituent partnerships,” defrauded investors, failed to provide annual audited financial statements, hired as a chief compliance officer a person with inside knowledge of an SEC investigation into GPB, and engaged in other forms of wrongdoing. The Court held that, based on these facts, the plaintiffs, limited partners of the constituent partnerships, had sufficiently met their burden in pleading that any demand on GPB to take corrective action would have been futile. Accordingly, the plaintiffs were entitled to prosecute this action on the partnerships’ behalf, in place of GPB. “I find none of [defendants’] arguments persuasive and conclude that it is reasonably conceivable that GPB has breached its fiduciary duties to the Partnerships,” the Vice Chancellor found.
Read more about Vice Chancellor Glasscock’s opinion.
The case is Lipman, et al. v. GPB Capital Holdings, LLC, case number 2020-0054-SG in the Delaware Court of Chancery.