Delaware Allows Secured Creditors to Foreclose Without Shareholder Approval

In July 2023, Delaware amended its code to allow certain secured creditors under mortgages or pledges of assets to rely on a Board of Directors decision if the value is less than or equal to the total amount secured. The failure to satisfy this provision would not result in invalidation if the transferee provided value therefor and acted in good faith. These provisions, however, are subject to opt-out by a provision in the certificate of incorporation effective after August 1, 2023. The meaning of “value” may be subject to some interpretation. That said, these amendments appear to resolve an issue presented by Stream TV Networks, Inc. v. SeeCubic, Inc., 279 A.3d 323, 329 (Del. 2022).