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Acela Investments LLC v. Difalco

Court of Chancery of Delaware

June 28, 2019

ACELA INVESTMENTS LLC, ACELA FIRST INVESTMENTS LLC, ACELA NEW INVESTMENTS LLC, and DR. STEFAN AIGNER, Plaintiffs,
v.
RAYMOND DIFALCO and MANISH SHAH, Defendants. RAYMOND DIFALCO, Counterclaim and Third-Party Plaintiff,
v.
DR. STEFAN AIGNER, Counterclaim Defendant, and INSPIRION DELIVERY SCIENCES, LLC, Third Party Defendant.

          ORDER DENYING PLAINTIFFS' APPLICATION FOR CERTIFICATION OF INTERLOCUTORY APPEAL AND MOTION FOR STAY PENDING APPEAL

          Andre G. Bouchard, Chancellor

         WHEREAS:

         A. Inspirion Delivery Sciences, LLC ("IDS" or the "Company") is the successor to a private pharmaceutical venture that was co-founded by Manish Shah, Raymond DiFalco, and Stefan Aigner. Its LLC Agreement contains a bespoke governance structure (i) that names Aigner and DiFalco as Chief Executive Officer and President, respectively, and provides that they each must perform their duties subject to the "advice and consent" of the other, and (ii) that entitles either (a) Aigner or (b) DiFalco and Shah together to veto any action of its board, [1] subject to a provision intended to address conflicts of interest.

         B. On November 13, 2018, the parties agreed to bifurcate this action so that their claims relating to the governance of the Company (the "Governance Claims") would be tried on an expedited basis in December 2018 while their remaining claims for damages (the "Remaining Claims") would be held in abeyance.

         C. On May 17, 2019, the court issued a 94-page post-trial memorandum opinion (the "Opinion") in which it ruled in favor of DiFalco and Shah and against Aigner and his affiliated entities (the "Aigner Parties") on all of the Governance Claims. Among other things, the court found under 6 Del. C. § 18-802 that it is not reasonably practicable to carry on the business of IDS in conformity with its LLC Agreement and declared that IDS should be dissolved and that a liquidating trustee should be appointed to wind up its affairs.

         D. On May 24, 2019, after the parties notified the court that they jointly had selected Derek C. Abbott, Esq. to serve as the Liquidating Trustee, the court entered a judgment on the Governance Claims (the "Implementing Order").

         E. On May 31, 2019, the court entered an order formally appointing the Liquidating Trustee and authorizing him to, among other things, "identify and marshal the assets of IDS and dispose of those assets in the manner the Liquidating Trustee determines is in the best interests of IDS and designed to maximize the value of IDS, including by creating and implementing a sales process for IDS's assets" (the "Trustee Order").[2] The Trustee Order expressly provides that any "sale process shall be approved by the Court after application by the Liquidating Trustee."[3]

         F. On June 10, 2019, the Aigner Parties applied for certification of an interlocutory appeal of the Memorandum Opinion, Implementing Order, and Trustee Order. That same day, the Aigner Parties moved for a stay pending appeal that they describe as being "limited" in nature.

         G. On June 20, 2019, DiFalco and Shah filed an opposition to the application for certification of interlocutory appeal and to the motion for a stay pending appeal. That same day, the Liquidating Trustee submitted a letter taking no position on the request for certification of an interlocutory appeal but explaining that the "so-called 'limited' stay requested pending [appeal] will substantially curtail him in the performance of his duties pursuant to [the Trustee Order]."[4]

         NOW, THEREFORE, this 28th day of June, 2019, IT IS HEREBY ORDERED, ADJUDGED, and DECREED as follows:

         Application for Certification of Interlocutory Appeal

         1. Supreme Court Rule 42 provides that an interlocutory appeal will not be certified "unless the order of the trial court decides a substantial issue of material importance that merits appellate review before a final judgment."[5]

         2. In my view, although the Opinion decided a substantial issue of material importance (i.e., that it is not reasonably practicable for IDS to carry on its business in accordance with its LLC Agreement), appellate review is not warranted before the Liquidating Trustee has recommended and the court has approved (conditioned on appellate review) a transaction or plan to wind up the Company's affairs so that that issue and the rulings in the Opinion can be reviewed in a single appeal.

         3. Supreme Court Rule 42 states that "[i]nterlocutory appeals should be exceptional, not routine, because they disrupt the normal process of litigation, cause delay, and can threaten to exhaust scarce party and judicial resources."[6] Rule 42 sets forth eight criteria that "the ...


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