Citizens for a Pro-Business Delaware lobby to change the law in the state

April 1, 2017

The Citizens for a Pro-Business Delaware (CPBD) have a busy few weeks ahead of them. Formed as a response to the TransPerfect case where a Delaware judge ruled that a profitable company be forced to sell, the group intends to spend its time lobbying for a new bill that would instill a three year wait for this type of ruling.

TransPerfect was founded 25 years ago and is incorporated in Delaware along with 64 percent of Fortune 500 companies. Since its creation, the company has seen an increase in profit, customers, and employees from quarter to quarter, now employing over 4,000 people around the world, and in 46 states with 75 employees in Delaware alone, according to Chris Coffey, Citizens for a Pro-Business Delaware’s campaign manager. The co-founders, Elizabeth Elting and Phil Shawe own 50 percent and 49 percent of the company respectively. One percent of the company is owned by Mr. Shawe’s mother, Shirley Shawe. 

The two co-founders ended up in corporate deadlock as Elting wants to sell the business, while Shawe does not. After taking the case to the Delaware Court of Chancery, Chancellor Andre Bouchard ruled in Elting’s favor due to the potential for irreparable damage to the company caused by the owners’ fighting. This forced selling of a successful, profitable business, which brings in about $550 million a year in profit, is “an unprecedented ruling,” said Chris Coffey, the campaign manager for Citizens for a Pro-Business Delaware. “There was a strong dissent from Justice Karen Valihura which lays out many of the arguments that we’ve made along the way” in the Delaware Supreme Court’s recent 4-1 ruling upholding the decision, Coffey added. 

However, Citizens for a Pro-Business Delaware is attempting to eradicate the idea that the case it “settled.” In fact, it is far from over, Coffey explained. Coffey stated that he has heard Shawe is planning to appeal to the U.S. Supreme Court as well as a federal appeal moving forward. Short of the owners settling,  the judicial aspect of the case could go on for some time. “We’ve always said that the best thing that could happen in this case would be for the two owners to get together and figure out a way to keep the company together,” Coffey said. 

In the meantime, the Citizens for a Pro-Business Delaware will continue working with legislators to pass the bill they introduced roughly six months ago. This would force the sale of the company to be postponed for three years while alternative avenues are explored, such as appointing a third director during that waiting period. 

“We’re optimistic that if that happens they would work out a compromise,” said Coffey of the three year postponement, “which really is what the judge should be doing. The judge should be looking at ways to get these folks to settle so that we’re not putting 4,000 jobs and lives at risk.” The bill also aims to strengthen the Delaware economy, as the sale of TransPerfect could not only result in a loss of 4,000 jobs, but also put Delaware’s reputation as a safe place for business at risk. Incorporated industries in Delaware contribute significantly to the State’s economy and a large portion of the state budget comes from the incorporated industry, according to Coffey. “Yet right now you have something that puts the incorporated industry in jeopardy,” Coffey said. “Businesses will not want to come to Delaware to incorporate if a judge will immediately force the sale of the company without first trying to save it,” he added.

Recently, Citizens for a Pro-Business Delaware has revealed the spending of court appointed Custodian, Richard Pincus, tasked with facilitating the sale of the company. The group released ads comparing his costs to those of other custodians and reported Pincus charges $1,400 an hour, whereas the average custodian in Delaware, Maryland, or New York costs $400 an hour. 

“Even with the three year waiting, we would still try to be a watchdog for some of the runaway spending that has been going on,” he added. “So at a time when the court says that this company is in danger…” Coffey commented, “They’ve spent $18 million in the last year and when they’ve also raised the cost for healthcare for my members, the employees of the company, by 13 percent, and its unchecked.” Coffey said that the custodian has hired consulting firms and auditors, and “every time the custodian hands in a bill to one of these other consulting companies he’s got working for him, the court doesn’t even have to approve it.” 

“This is a strange case,” Coffey went on, “and the more folks that are paying attention to, it the better off we think our chances are.” He also added that he thought the Shirley Shawe’s latest proposal could be beneficial to his group. “If Shirley Shawe’s proposal helps save our member’s jobs and helps keep the successful, profitable company intact - we are all for it,” Coffey added, referencing Shirley Shawe’s recent proposal to pledge her one percent stake in favor of five boardroom candidates selected by Elting to break the deadlock. If this were approved, the court’s rationale for ordering the sale of TransPerfect would be moot.“We are taking every action to save help the families of our employees and keep the Delaware economy strong.” 

In addition, Citizens for a Pro-Business Delaware is working hard to bring more transparency to the case. The group has TV and radio ads airing throughout Delaware. The members are going out to meet with and speak to voters in Delaware, getting another 1,200 supporters in the last two weeks, according to Coffey. 

Coffey has been approached by numerous people about the case, and “none of them can understand how the government could step in on a successful company with 4,000 employees and force the sale of that company and put that at risk,” he said. “There must be a better solution.”

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