In the recent judgment of In the Matter of
Background
Following a directions hearing in
Timing of factual evidence
The Court found that even though the possibility of the 1782 applications had been foreshadowed by the dissenting shareholders at the time of the earlier directions hearing, their subsequent filing necessitated an adjustment to the timetable. In particular, the Court considered that it was fair and reasonable to allow SINA to deal with any additional material that might be ordered to be produced by third parties, before preparing its own factual evidence, which may take this additional material into account.
The time for factual evidence was consequently ordered to run from the date that all discovery is provided, including any discovery that is provided by third parties under 28 U.S.C. §1782.
Comment
The Court's decision to extend the Cayman timetable until any third party disclosure is provided underscores the importance of issuing any 1782 applications against third parties as early as possible in section 238 proceedings.
Expert valuation reports in section 238 appraisals are not exchanged until after factual evidence has been provided, so any additional time permitted for factual evidence could materially delay the resolution of the proceedings. It is also conceivable that a company may get a second bite at the evidential cherry if any 1782 applications are filed after the exchange of factual evidence, allowing it to respond to any new matters that might arise out of the later third party disclosure.
Launching 1782 applications at an early stage is, however, easier said than done in practice. Potential third party discovery targets may only be identifiable after considering the company's disclosure - and potentially the content of its factual evidence. In such circumstances, dissenting shareholders will need to carefully assess whether the benefits of seeking additional third party disclosure outweigh the potentially lengthy delays that may be caused to the appraisal timetable.
Footnote
1 In the Matter of
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Mr
Ogier
KY1-9009
Tel: 534514000
Fax: 534514444
E-mail: Kate.Kirk@ogier.com
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