The Odd Lot Offer and Resale was pitched to the public and the American Stock Exchange as a resale to HGI of existing, listed Partnership units, not as an issuance of new, unlisted units.
Hille, of White & Case, LLP, New York City; and Theodore N. Bergman, of Wachtell, Lipton, Rosen & Katz, New York City, of counsel, for Appellant. The Court of Chancery held that the limited partnership agreement here provided for such fiduciary duties by requiring the general partner and its controlling entity to treat the limited partners in accordance with the entire fairness standard. See also Int'l Telecharge, 766 A.2d at 440 (stating that “the powers of the Court of Chancery are very broad in fashioning equitable and monetary relief under the entire fairness standard as may be appropriate”); Cantor Fitzgerald, L.
In this appeal, we hold that a limited partnership agreement may provide for contractually created fiduciary duties substantially mirroring traditional fiduciary duties that apply in the corporation law.
At first, HGI declined to provide funding for the reverse split and odd lot offer.
But, by March 1995, HGI was willing to fund the Reverse Split and Option Plan, which were approved by the non-HGI directors on the General Partner's board. (noting “in particular the evidence that indicates the reluctance of HGI to fund the Odd Lot Offer”). at 13 (stating that HGI first declined to provide funding for the Reverse Split and Odd Lot Offer).64.
Consequently, we reverse the damages award and remand for such proceedings as may be necessary and appropriate: (1) to quantify how the challenged transaction would have been consummated had the defendants adhered to the entire fairness standards and procedures of the limited partnership agreement; and (2) to consider and award one or more of the various equitable remedies available to the limited partnership, including rescission, rescissory damages, sterilization of voting rights, or other appropriate methods of accounting for the control premium. Hallwood Realty Corporation (“the General Partner”) is the sole general partner and is a wholly-owned subsidiary of Hallwood Group Incorporated (“HGI”), which owned 5.1 percent of the outstanding partnership units before the transactions challenged in this case.
Anthony Gumbiner and William Guzzetti were members of the board of directors of the General Partner. As the Court of Chancery noted, one effect of the challenged transaction was that the general partner and its corporate parent gained control of the limited partnership as a result of wrongdoing. (“Gotham”) is a hedge fund, the investments of which include real estate. In our view, the value of the control thus achieved was not properly compensated for by the award of damages because the trial court did not account properly for a control premium in its remedy calculation. (“the Partnership”) is a Delaware limited partnership that owns commercial office buildings and industrial parks in several locations in the United States and lists its partnership units on the American Stock Exchange. It is the largest independent limited partner in the Partnership with approximately 14.8 percent of the outstanding partnership units. HGI purchased 30,000 units, approximately 1.6 percent of the Partnership's equity, through the Reverse Split. The Option Plan resulted in officers and employees of the General Partner purchasing 86,000 units or 4.7 percent of the Partnership's equity. 15 (Del.2001) (urging prospective plaintiffs to use the “tools at hand,” such as books and records requests, to obtain information to support their claims and to avoid dismissal for failure to state a claim).61. Through these two transactions, HGI increased its ownership of outstanding Partnership units from 5.1 percent to approximately 11.4 percent.