A Bankruptcy Court’s Newly Founded Ability To Certify Questions Of Law, Namely Involving Corporate Law Issues, To The Delaware Supreme Court

The Delaware State Legislature recently amended Article IV, section 11 of the Delaware Constitution to add United States Bankruptcy Courts to the expanding list of courts and agencies that may certify questions to the Delaware Supreme Court. The list already included other Delaware courts, the United States Supreme Court, a Court of Appeals of the United States, a United States District Court, the United States Securities and Exchange Commission, or the highest appellate court of any other state. See Del. Const. art. IV, § 11(8). If history is any predictor, it will not take long for United States Bankruptcy Courts (and counsel involved in the underlying bankruptcy proceeding) to begin to utilize this new avenue of interpretation of Delaware law, and the questions to be certified will likely involve evolving areas of corporate governance and fiduciary duties.

Prior to the most recent amendment, the SEC was the last addition to the certification list in 2007. At the time, the Legislature indicated that the amendment was necessary as "more than half of the publicly traded companies in the United States are Delaware corporations." See 2007 Delaware Laws Ch. 37 (S.B. 62). The amendment was quickly utilized the following year when the SEC certified two questions to the Delaware Supreme Court regarding a proposed stockholder bylaw submitted for inclusion in proxy materials. See CA, Inc. v. AFSCME Employees Pension Plan, 953 A.2d 227 (Del. 2008). The United States District Courts have also certified questions to the Delaware Supreme Court in recent years. See Lincoln Nat. Life Ins. Co. v. Joseph Schlanger 2006 Ins. Trust, 28 A.3d 436 (Del. 2011) (certified question related to Delaware insurance law)...