News & Noteworthy

Case Development - Bruce Bronster and David Graff Prevail on Issue of First Impression in Delaware Chancery Court
MARCH 21, 2013

Bruce Bronster (Partner, New York) and David Graff (alumnus) prevailed on an issue of first impression in the Delaware Court of Chancery. The Court granted the Firm's client, Peter E. Deutsch, an option to 'put' ZST Digital Networks, Inc. ("ZSTN") for an amount that will yield $30,000,000.00. The Put Option results from the failure of ZSTN to produce its books and records to Mr. Deutsch, despite demand under the applicable law and an Order of the Delaware Court. It is the first time in the history of the Delaware Courts that a put right has been granted in such a circumstance.

David was quoted by the The Wall Street Journal in a March 31 article entitled "Novel Relief for China Woes", saying "we are gratified by the court's decision," and adding that the ruling "sets an important precedent for other investors who have suffered losses in Chinese companies".

The New York Post also covered the case, as well as the subsequent investigation of paperwork and computer files in an attempt to locate ZSTN assets, in an April 19 article entitled "China chicanery".

The Chancery Daily reported on the court's Order in its March 21 edition, saying, "This case illustrates one creative approach that a US shareholder has taken to obtain relief from a US-listed company based in China -- a challenge that an increasing number of shareholders face as many such companies have come under regulatory scrutiny, delisted their shares, and abandoned their US presence."

The case is Deutsch v. ZST Digital Networks, Inc.

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