Case Title: Anderson v. Krafft-Murphy Co. Inc.

Citation: 

Docket Number: 85, 2013

State: delaware

Court: Delaware Supreme Court

Date: 2013-11-26T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
IN THE MATTER OF KRAFFT- 
§ 
MURPHY COMPANY, INC., 
§ 
A Dissolved Delaware Corporation 
§ 
No. 85, 2013 
 
 
§ 
ROBERT F. ANDERSON, et al., 
§  Court Below:  Court of Chancery of 
 
 
§  the State of Delaware 
 
Petitioners/Intervenors 
§  C.A. No. 6049 
 
Below, Appellants, 
§  
 
 
§ 
 
v. 
§ 
 
 
§ 
KRAFFT-MURPHY COMPANY, 
§ 
INC., 
 
§ 
 
Respondent Below, 
§ 
 
Appellee.  
§ 
 
 
 
Submitted:  August 21, 2013 
 
 
Decided:   November 26, 2013 
 
Before STEELE, Chief Justice, HOLLAND, BERGER, JACOBS, and, 
RIDGELY, Justices, constituting the Court en Banc. 
 
Upon appeal from the Court of Chancery.  REVERSED and REMANDED. 
 
Raeann Warner and Jordan J. Perry, Esquires, Jacobs & Crumplar, P.A., 
Wilmington, Delaware; Jeffrey P. Wasserman, Esquire, Ciconte, Wasserman & 
Scerba, LLC, Wilmington, Delaware; Of Counsel:  Jennifer L. Lilly, Esquire 
(argued), The Law Offices of Peter G. Angelos, P.C., Baltimore, Maryland; Daniel 
A. Brown and Eileen M. O’Brien, Esquires, Brown & Gould, LLP, Bethesda, 
Maryland, for Appellants. 
 
Francis J. Murphy, Esquire, Murphy & Landon, Wilmington, Delaware; Of 
Counsel:  Joseph L. Ruby, Esquire (argued), Lewis Baach PLLC, Washington, 
DC, for Appellee. 
 
 
JACOBS, Justice: 
 
2
I. 
INTRODUCTION 
This is an appeal from a judgment of the Court of Chancery in an action to 
appoint a receiver for Krafft-Murphy Company, Inc. (the “Corporation”), a 
dissolved Delaware corporation, under 8 Del. C. § 279.  The Petitioners-
Below/Appellants, who are tort claimants in lawsuits pending against the 
Corporation in other jurisdictions, seek the appointment of a receiver to enable 
them lawfully to pursue those claims against the Corporation in those other courts.  
The Corporation (as Respondent-Below/Appellee) argues that because it holds no 
assets other than unexhausted liability insurance policies, Delaware law does not 
authorize the appointment of a receiver and that, in any event, it is not necessary to 
appoint one.  The Court of Chancery granted summary judgment in favor of the 
Corporation.  The Petitioners timely appealed.  
The case raises two interrelated questions of first impression in this Court, 
plus a third question directly addressed by settled Delaware law.  First, does a 
contingent contractual right, such as an insurance policy, constitute “property” 
within the meaning of 8 Del. C. § 279?  Second, does Delaware’s statutory 
corporate dissolution scheme (8 Del. C. §§ 278-282) contain a generally applicable 
statute of limitations that time-bars claims against a dissolved corporation by third 
parties after the limitations period expires?  Third, after 8 Del. C. § 278’s three 
 
3
year winding-up period expires, does a dissolved corporation have the power to act 
absent a court-appointed receiver or trustee?   
We conclude that under 8 Del. C. § 279, contingent contractual rights, such 
as unexhausted insurance policies, constitute “property” of a dissolved corporation, 
so long as those rights are capable of vesting.  We further hold that Delaware’s 
dissolution statutes impose no generally applicable statute of limitations that would 
time-bar claims against a dissolved corporation by third parties.  Finally, we hold 
that the existence of the “body corporate” continues beyond the expiration of the 
statutory winding-up period of 8 Del. C. § 278 for purposes of conducting 
litigation commenced before the expiration of that period.  But, for litigation 
commenced after the expiration of that statutory period, a dissolved corporation 
may act only through a receiver or trustee appointed under 8 Del. C. § 279.   
Because the judgment of the Court of Chancery rests on legal determinations 
inconsistent with these holdings, we reverse the judgment and remand the case for 
further proceedings in accordance with this Opinion.  
II. 
FACTUAL BACKGROUND AND PROCEDURAL HISTORY 
A. 
The Parties 
 
 The Corporation is a dissolved Delaware corporation that, before its 
dissolution in 1999, engaged in the plastering business in the Washington, D.C. 
metropolitan area.  Beginning in 1989, the Corporation was named as a defendant 
 
4
in hundreds of asbestos-related personal injury lawsuits.  The Corporation’s 
defense both in this Delaware proceeding, and in the personal injury lawsuits in 
other jurisdictions, is being funded and directed by the Corporation’s liability 
insurers in accordance with the applicable insurance policies. 
 
The original Petitioners-Below, who are asbestos claimants represented by a 
Baltimore, Maryland law firm, have asbestos-related personal injury claims 
pending against the Corporation in other jurisdictions.  During the Court of 
Chancery proceedings in this case, other tort claimants, represented by a different 
law firm, were permitted to intervene.  The original Petitioners-Below and the 
Intervenors-Below are referred to collectively as “Petitioners.”  
B. 
Facts 
The material facts are not disputed.  The Corporation was formed in 
Delaware in 1952.  Although the Corporation was primarily a plastering company, 
it also supplied and installed Sprayed Limpet Asbestos, an asbestos-containing 
product.  That activity exposed the Corporation to significant liability risk, and 
ultimately caused it to be named as a defendant in hundreds of asbestos-related 
lawsuits.  
While it was fully operational, the Corporation obtained primary liability 
insurance from various insurance companies, including Travelers Casualty and 
Surety Company, CNA Insurance Company, and Great American Insurance 
 
5
Company (collectively, the “Insurers”).  The applicable insurance policies obligate 
the Insurers to defend the Corporation in suits for damages covered by the policies, 
and also to indemnify the Corporation against covered third party claims.  The 
coverage available under those insurance policies has not been exhausted.   
The Corporation ceased operations in 1991, and in 1999 it formally 
dissolved, pursuant to 8 Del. C. § 275.  The Corporation did not elect to notify 
creditors of its dissolution under the procedure set forth in 8 Del. C. § 280.  Nor 
did the Corporation make any provisions for claims of future creditors and 
claimants, utilizing the procedure set forth in 8 Del. C. § 281(b).  All parties agree 
that the Corporation’s only assets are its unexhausted insurance policies.  
C. 
The Asbestos Proceedings and the § 279 Petition 
In 2010, the Corporation began filing motions in other courts to dismiss 
asbestos-related claims commenced more than ten years after its dissolution.1  The 
underlying basis of those motions was that because the Corporation has been 
dissolved for more than three years, it is no longer amenable to suit as a matter of 
Delaware law.2 
The Petitioners responded to those motions to dismiss by (inter alia) filing, 
in the Court of Chancery, a verified petition for the appointment of a receiver for a 
                                                 
1 In re Krafft-Murphy Co., Inc., 62 A.3d 94, 96-97 (Del. Ch. 2013).  
2 Id. at 97.   
 
6
dissolved corporation under 8 Del. C. § 279.  The Corporation moved to dismiss 
the Petition on grounds of insufficient service of process and failure to state a 
claim upon which relief can be granted.  On November 9, 2011, the Court of 
Chancery granted the Petitioners’ motion to perfect service of process and denied 
the Corporation’s motion to dismiss.3  
On August 1, 2012, the Corporation moved for summary judgment.  In 
response, the Petitioners moved for judgment on the pleadings.  By Opinion dated 
February 4, 2013, the Court of Chancery granted the Corporation’s motion for 
summary judgment and denied the Petitioners’ motion for judgment on the 
pleadings.4 
D. 
The Court of Chancery Opinion 
 
During the Court of Chancery proceedings, the Insurers represented to the 
court that the Corporation would continue to litigate and defend against all third 
party claims filed less than ten years after its dissolution.5  For that reason (the 
Corporation argued), it was unnecessary to appoint a receiver to facilitate the 
litigation of those claims.  As for claims filed more than ten years after the 
Corporation dissolved—claims that the Corporation had moved in various courts to 
                                                 
3 Id. 
4 Id. at 96. 
5 Id. at 104 n.56. 
 
7
dismiss—the Corporation argued that it held no assets (“property”) that would 
justify the appointment of a receiver.6  Accepting the Insurers’ argued-for 
distinction between those two sets of claims, the Court of Chancery held that 
claims filed more than ten years after the date of dissolution were time-barred and 
should be dismissed,7 and that claims filed less than ten years after the date of 
dissolution could proceed without a court-appointed receiver.8 
More specifically, the court accepted the Corporation’s assurances (made by 
its Insurers) that it would continue to defend against all claims that were filed 
within ten years of the date of dissolution.  On that basis, the court determined that 
with respect to those claims, the petition to appoint a receiver “depend[ed] 
upon . . . a factual scenario that is hypothetical and speculative,” and, therefore, 
was not “justiciable.”9  
Regarding claims filed after the tenth anniversary of the dissolution, the 
Vice Chancellor noted that under 8 Del. C. § 279, a receiver may be appointed at 
any time if the dissolved corporation has “still existing property interests.”10  The 
                                                 
6 Id. at 98. 
7 In re Krafft-Murphy Co., Inc., 62 A.3d at 104-05. 
8 Id. at 104 n.56. Petitioners’ claims against the Corporation were all filed more than three years 
after the Corporation’s dissolution.  
9 Id. 
10 Id. at 101, 102-03 (quoting In re Citadel Indus., Inc., 423 A.2d 500, 506 (Del. Ch. 1980)).   
 
8
court concluded, however, that the Corporation held no existing property interests, 
reasoning as follows:11  The Corporation’s liability insurance policies would have 
value, and constitute “property” under § 279,12 only if the Corporation could be 
potentially held liable to third parties, which would trigger coverage under the 
policies.13  However, the court determined, Delaware’s dissolution statutes 
(8 Del. C. §§ 278-282) operate to extinguish a dissolved corporation’s liability 
after ten years from the date of dissolution, because those provisions establish a ten 
year outer limit within which a dissolved corporation can potentially be held liable 
for third party claims.14  Therefore, the Corporation could not be “liable for tort 
suits . . . brought after ten years,” and as a consequence, the liability insurance 
policies “are not as a matter of law undistributed assets in relation to claims 
commenced more than ten years after dissolution.”15  Lastly, the court concluded, 
                                                 
11 Id. at 105.  
12 Although the 8 Del. C. § 279 refers to “property,” many Delaware courts, including the Court 
of Chancery in this proceeding, have used the term “assets” when interpreting § 279.  In this 
Opinion, we use the statutory term “property.”   
13 In re Krafft-Murphy Co., Inc., 62 A.3d at 103. 
14 Id. at 104. 
15 Id. at 104-05.  The court distinguished this case from In re Texas Eastern Overseas, Inc., 2009 
WL 4270799 (Del. Ch. Nov. 30, 2009) aff'd, 998 A.2d 852 (Del. 2010) (TEO), where the Court 
of Chancery found that liability insurance policies constituted “property” for the purposes of 
8 Del. C. § 279.  The Vice Chancellor explained that because the lawsuits at issue in TEO were 
filed seven years after dissolution, the policies still had potential value.  Id. at 106.  Moreover, he 
reasoned, the parties in TEO did not directly address whether insurance policies constituted 
“property” under § 279.  Id. at 105. 
 
9
defending against litigation claims for which the corporation cannot be held liable 
is not part of the Corporation’s “unfinished business.”16 
III. 
THE PARTIES’ CONTENTIONS AND 
 
THE STANDARD OF REVIEW 
 
A. 
The Contentions on Appeal 
 
Petitioners claim that the Court of Chancery legally erred by not appointing 
a receiver for the Corporation, for two separate reasons.  First, Petitioners claim 
that the Court of Chancery erroneously concluded that, with respect to claims filed 
more than ten years after the Corporation’s dissolution, the unexhausted liability 
insurance policies do not constitute “property” that would justify appointing a 
receiver under 8 Del. C. § 279.  Second, Petitioners claim that the court 
erroneously concluded that, because the Insurers had undertaken to continue 
defending those claims on the Corporation’s behalf, the Petition was not 
“justiciable” with respect to claims filed less than ten years after dissolution. 
 
To support their first claim, Petitioners argue as follows: Delaware courts 
have consistently held that contingent rights constitute “property” for purposes of 8 
Del. C. § 279.  Moreover, the applicable Delaware corporate dissolution statutes (8 
Del. C. §§ 280-282) do not operate to extinguish a dissolved corporation’s liability 
to third parties.  All that those statutes do is specify how directors of a dissolving 
                                                 
16 Id. at 105. 
 
10
corporation must provide for the post-dissolution distribution of assets, to enable 
the corporation’s shareholders and directors to avail themselves of a “safe harbor” 
from post-dissolution liability.  Those provisions do not constitute, nor do they 
operate as, a statute of limitations that would time-bar third party claims against a 
dissolved corporation.  Finally, and in any event (the Petitioners urge), §§ 280-282 
are inapplicable because the Corporation never complied with either provision, and 
because no third party claimant is seeking redress against the Corporation’s 
directors or shareholders. 
In support of their second claim of error, Petitioners argue that by declining 
to appoint a receiver to defend against claims filed less than ten years after 
dissolution, the Court of Chancery contravened 8 Del. C. § 278, under which a 
dissolved corporation loses all power to act after the statutory three year winding-
up period expires.  Because any continued activity by a dissolved corporation (as a 
“body corporate”)—including participating in litigation—after § 278’s three year 
period expires is statutorily ultra vires, a receiver or trustee must be appointed to 
lawfully wind up the corporation’s affairs.   
The Corporation vigorously contests these claims.   
 
 
 
 
11
B. 
The Issues  
 
The parties’ contentions raise several issues.  The first is whether a 
receiver17 may be appointed for a corporation that has been dissolved for more than 
ten years and whose assets consist solely of unexhausted liability insurance 
policies.  That issue raises two subsidiary questions: (i) whether contingent 
contractual rights—here, unexhausted liability insurance policies—constitute 
“property” that would justify the appointment of a receiver under 8 Del. C. § 279; 
and (ii) if so, whether those contingent rights in this case can ever vest.  We 
conclude that contingent contractual rights constitute “property” within the 
purview of § 279 if they possibly could vest at a future time.  Here, the 
Corporation’s right to recover under the liability insurance policies will vest only if 
the dissolved corporation could be held liable to third parties.  That potential 
liability issue requires us to address whether (as the Corporation argues) the 
statutory provisions governing dissolution (i.e.,§§ 278-282) operate as a general 
statute of limitations that time-bars all third party claims against a dissolved 
corporation after the limitations period expires.  If they do, then the Corporation 
                                                 
17 8 Del. C. § 279 authorizes the Court of Chancery to appoint a receiver or a trustee.  Because 
the Petitioners seek the appointment of a receiver—and for brevity’s sake—we refer primarily to 
a “receiver” in this Opinion.  Our analysis, however, is equally applicable to the appointment of 
a trustee. 
 
12
could not be liable for those claims, and the Corporation’s right to recover under 
the policies on those claims would never vest. 
 
The final question is whether, after the expiration of the three year period 
described in 8 Del. C. § 278, a receiver must be appointed to enable a dissolved 
corporation lawfully to defend against litigation commenced after the expiration of 
the three year statutory period.   
C. 
The Standard of Review 
 
This Court reviews a trial court’s decision to grant summary judgment de 
novo.18  Summary judgment may be granted only if, based on the undisputed 
material facts, the moving party is entitled to judgment as a matter of law.19  Here, 
because there are no material facts in dispute, the only issues presented are 
questions of law that involve the proper interpretation of the statutes governing the 
dissolution and winding-up of a Delaware corporation. 
 
 
                                                 
18 Alvarez v. Castellon, 55 A.3d 352, 354 (Del. 2012) (citing LaPoint v. AmerisourceBergen 
Corp., 970 A.2d 185, 191 (Del. 2009)).  
19 Motorola, Inc. v. Amkor Tech., Inc., 849 A.2d 931, 935 (Del. 2004) (citing Rhudy v. 
Bottlecaps, Inc., 830 A.2d 402, 405 (Del. 2003)). 
 
13
 
We also review de novo a trial court’s interpretation of statutory 
provisions.20  As the Court of Chancery correctly observed:  
In interpreting a statute, Delaware courts must ascertain and give 
effect to the intent of the legislature.  If the statute is found to be clear 
and unambiguous, then the plain meaning of the statutory language 
controls.  The fact that the parties disagree about the meaning of the 
statute does not create ambiguity.  Rather, a statute is ambiguous only 
if it is reasonably susceptible of different interpretations, or if a literal 
reading of the statute would lead to an unreasonable or absurd result 
not contemplated by the legislature.  If a statute is ambiguous, 
however, courts should consider the statute as a whole, rather than in 
parts, and read each section in light of all others to produce a 
harmonious whole.  Courts also should ascribe a purpose to the 
General Assembly's use of statutory language, and avoid construing it 
as surplusage, if reasonably possible.21  
 
IV. 
ANALYSIS 
A. 
Dissolution under the Delaware General Corporation Law 
At common law, dissolution marked a corporation’s “civil death,” and all 
actions against the corporation abated.22  The statutory provisions found in 8 Del. 
C. §§ 278-282 supplant and supersede the common law, by prolonging a 
corporation’s existence and its exposure to liability.23  Those same provisions also 
                                                 
20 Bay City, Inc. v. Williams, 2 A.3d 1060, 1061 (Del. 2010) (citing Del. Bay Surgical Servs. v. 
Swier, 900 A.2d 646, 652 (Del. 2006)).  
21 In re Krafft-Murphy Co., Inc., 62 A.3d at 100 (footnotes and quotations omitted).  
22 In re RegO Co., 623 A.2d 92, 95 (Del. Ch. 1992).  
23 See In re Citadel Indus., Inc., 423 A.2d 500, 503 (Del. Ch. 1980) (“[S]tatutory authority is 
necessary to prolong the life of a corporation past its date of dissolution.”). 
 
14
shield a dissolved corporation’s directors and shareholders from liability in 
specified circumstances.24  To facilitate the winding-up of a dissolved 
corporation’s affairs, § 278 extends the (post-dissolution) corporate existence for 
three years.25  Section 279 independently authorizes the appointment of a receiver 
“at any time” for specified purposes.26  Sections 280-281(b) outline planning 
procedures whereby a corporation must provide for future post-dissolution claims, 
pay existing claims, and distribute any remaining assets to shareholders.27  Finally, 
§§ 281(c) and 282 provide a “safe harbor” from liability to directors and 
shareholders of corporations that have complied with § 281(a) or (b).28  
B. 
A Receiver May Be Appointed to Defend Against Claims 
Filed More Than Ten Years After Dissolution 
 
 
Petitioners claim that the Court of Chancery erred by concluding that the 
Corporation did not hold any “property” that would justify the appointment of a 
receiver.  We agree, for the following reasons:  8 Del. C. § 279 authorizes the 
appointment of a receiver to continue a dissolved corporation’s winding-up 
                                                 
24 See In re RegO Co., 623 A.2d at 96-97 (explaining that §§ 280-282 “recognize[] rights in 
unknown future corporate claimants” and provide a safe harbor for directors and shareholders of 
dissolved corporations).  
25 8 Del. C. § 278 (2011). 
26 Id. § 279.  
27 Id. §§ 280-281(b).  
28 Id. §§ 281(c), 282.  
 
15
process—which may involve participating in litigation—in cases where the 
corporation has undistributed “property.”29  Under Delaware law, contingent 
contractual rights, such as unexhausted liability insurance policies, are “property” 
within the meaning of 8 Del. C. § 279 if and to the extent that they are capable of 
vesting.30  Here, the Corporation’s liability insurance policies are capable of 
vesting, because no statutory provision governing corporate dissolution operates to 
time-bar claims made by—and thereby terminate or extinguish a dissolved 
corporation’s potential liability to—third parties.   
1. 
A Receivership Appointment 
Under Section 279 
Sections 278 and 279 of the Delaware General Corporation Law (“DGCL”) 
both operate to enable a dissolved corporation to wind up its affairs.  Section 278 
prolongs the existence of the “body corporate” for three years after dissolution to 
enable the dissolved corporation to wind up its business, which includes 
participating in litigation.31   
                                                 
29 In re Citadel Indus., Inc., 423 A.2d at 506; See also In re Texas E. Overseas, Inc., 2009 WL 
4270799, at *3-4 (Del. Ch. Nov. 30, 2009) aff'd, 998 A.2d 852 (Del. 2010); In re Dow Chem. 
Int'l Inc., 2008 WL 4603580, at *1-2 (Del. Ch. Oct. 14, 2008). 
30 The Court of Chancery did implicitly acknowledge that an insurance policy could constitute 
“property” if the insured could be held liable to third parties on covered claims.  In re Krafft-
Murphy Co., Inc., 62 A.3d at 103, 105. 
31 8 Del. C. § 278 relevantly provides that “[a]ll corporations . . . shall . . . be continued, for the 
term of 3 years from such expiration or dissolution or for such longer period as the Court of 
Chancery shall in its discretion direct, bodies corporate for the purpose of prosecuting and 
 
16
 
After § 278’s three year period expires, § 279 empowers the Court of 
Chancery to oversee and facilitate (by appointing a trustee or receiver) the 
completion of the dissolved corporation’s unfinished business.32  Under § 279, the 
Court of Chancery may appoint a receiver, at any time, to:  (i) “take charge of the 
corporation's property,” (ii) “collect the debts and property due and belonging to 
the corporation,” (iii) “appoint an agent or agents,” and (iv) “do all other acts . . . 
necessary for the final settlement of the unfinished business of the corporation.”33  
Thus, § 279 enumerates the purposes for which a receiver may be appointed, which 
include administering the “still existing property interests of a dissolved 
corporation.”34 
                                                                                                                                                             
defending suits, whether civil, criminal or administrative, by or against them, and of enabling 
them gradually to settle and close their business, to dispose of and convey their property, to 
discharge their liabilities and to distribute to their stockholders any remaining assets, but not for 
the purpose of continuing the business for which the corporation was organized. With respect to 
any action, suit or proceeding begun by or against the corporation either prior to or within 3 
years after the date of its expiration or dissolution, the action shall not abate by reason of the 
dissolution of the corporation; the corporation shall, solely for the purpose of such action, suit or 
proceeding, be continued as a body corporate beyond the 3-year period and until any judgments, 
orders or decrees therein shall be fully executed, without the necessity for any special direction 
to that effect by the Court of Chancery.” 
32 In re Citadel Indus., Inc., 423 A.2d at 504-05.  
33 8 Del. C. § 279.  
34 In re Citadel Indus., Inc., 423 A.2d at 506 (“Where there are no undistributed assets against 
which to effect a recovery, § 279 provides little solace to one possessing an after-discovered 
claim against a dissolved corporation.”); See also Addy v. Short, 89 A.2d 136, 140 (Del. 1952) 
(interpreting a predecessor statute); In re Texas E. Overseas, Inc., 2009 WL 4270799, at *3-4; In 
re Dow Chem. Int'l Inc., 2008 WL 4603580, at *1. 
 
17
2. 
Contingent Property Rights Constitute 
“Property” Under Section 279  
 
Having held that a receiver may be appointed in cases where a dissolved 
corporation holds undistributed property, we turn to the next question: do 
unexhausted liability insurance policies held by a dissolved corporation constitute 
“property” within the meaning of § 279?  In Addy v. Short, this Court held that 
assets—i.e., “property”—of a dissolved corporation include both vested and 
contingent rights.35  Therefore, a receiver can be appointed for a dissolved 
corporation that holds only contingent rights.36  Although Addy dealt with 
contingent rights in land, its reasoning is equally applicable to contingent rights in 
personalty.  Both kinds of contingent rights have potential value to their holders.   
Here, the insurance policies obligate the Insurers to pay “all sums which the 
insured shall become legally obligated to pay as damages” covered by the 
policies.37  Because the Corporation is exposed to asbestos-related liabilities, those 
policies represent significant potential indemnification value to the Corporation.38  
And, because the Corporation held those policies before it dissolved, they 
                                                 
35 Addy, 89 A.2d at 140.   
36 Id.  
37 In re Krafft-Murphy Co., Inc., 62 A.3d at 103 (quoting language from Krafft-Murphy’s 
insurance contracts).  
38 See Addy, 89 A.2d at 140 (explaining that a property interest is “none the worse” for being 
“wholly contingent”).  
 
18
constitute “property” of the Corporation within the purview of § 279.39  In In re 
Texas Eastern Overseas, Inc. (which this Court affirmed), the Court of Chancery 
recently so concluded.40  There, that court held that unexhausted insurance policies 
constituted “property” that permitted the court to appoint a receiver for a dissolved 
corporation under § 279.  That holding correctly states Delaware law, and we 
reaffirm it.  
3. 
The 
Dissolution 
Statutes 
Do 
Not 
Extinguish The Corporation’s Liability To 
Third Parties 
The second issue is whether the Corporation’s contingent rights under the 
insurance policies are capable of vesting?  We conclude that they are, because no 
statutory provision governing corporate dissolution operates to extinguish the 
Corporation’s potential liability to third parties by time-barring those parties’ 
claims. 41  
 
Nothing in § 278 operates as a statute of limitations that would bar claims or 
extinguish a dissolved corporation’s liability to third parties.  It is the case—and 
our courts have frequently held—that as a body corporate a dissolved corporation 
                                                 
39 Addy, 89 A.2d at 141 (distinguishing McBride v. Murphy, 124 A. 798 (Del. Ch. 1924) because 
McBride involved a post-dissolution acquisition of rights).  
40 In re Texas E. Overseas, Inc., 2009 WL 4270799, at *6. 
41 We note that the Court of Chancery Opinion acknowledged that § 278 probably does not cut 
off corporate liability after three years.  In re Krafft-Murphy, 62 A.3d at 104.  
 
19
ceases to exist and is not amenable to suit after the expiration of § 278’s three year 
period.42  From that it does not follow, however, that § 278 extinguishes the 
corporation’s underlying liability to third parties.  To the contrary, § 279 enables a 
dissolved corporation to (through a receiver) “sue and be sued” after the expiration 
of the § 278 three year period.43  That is, § 279 establishes that the expiration of § 
278’s three year period does not extinguish the dissolved corporation’s underlying 
liability.   
Sections 280(c) and 281(b) also undermine any argument that § 278 operates 
as a general statute of limitations.  Those provisions require a dissolved 
corporation to set aside assets for the payment of claims against the corporation 
that may arise or become known five to ten years after dissolution.44  Those 
requirements demonstrate that the “legislature intended to recognize the potential 
for corporate liability based on claims asserted . . . five to ten years after 
dissolution.”45   
 
Nor do §§ 280-282 operate to cut off a dissolved corporation’s liability.  
Those statutory provisions offer directors of dissolved corporations two alternate 
                                                 
42 In re Citadel Indus., Inc., 423 A.2d at 504, 507; see In re RegO Co., 623 A.2d at 96. 
43 City Investing Co. Liquidating Trust v. Continental Cas. Co., 624 A.2d 1191, 1195 (citing 
Addy, 89 A.2d at 140). 
44 8 Del. C. §§ 280(c)(3), 281(b).  
45 In re Krafft-Murphy Co., Inc., 62 A.3d at 104. 
 
20
pathways to discharge their fiduciary duties to existing and future claimants, while 
also enabling the corporation to make distributions during its corporate winding-up 
activities.46  Sections 280-281(a) accomplish that by permitting a dissolving 
corporation to follow a court-supervised process47 under which the corporation:  (i) 
gives notice to persons with existing, contingent, conditional or unmatured 
claims;48 (ii) sets aside “security” both for pending, contingent, conditional or 
unmatured claims49 and for claims likely to arise or become known to the 
corporation within five years after the date of dissolution or such longer period of 
time as the Court of Chancery may determine not to exceed 10 years after the date 
of dissolution;50 and (iii) distributes to shareholders any assets that remain after 
claims have been paid or provided for as set forth in § 281(a).51   
                                                 
46 In re Transamerica Airlines, Inc., 2006 WL 587846, at *7 (Del. Ch. Feb. 28, 2006).  Upon 
dissolution, directors of a corporation owe fiduciary duties to creditors as well as shareholders. 
Gans v. MDR Liquidating Corp., 1990 WL 2851, at *9 (Del. Ch. Jan. 10, 1990).  
47 8 Del. C. § 280.  
48 Id. § 280(a)-(b). 
49 Id. § 280(b)(2) and (c)(1)-(2). 
50 Id. § 280(c)(3). 
51 Id. § 281(a). 
 
21
Alternatively, § 281(b) offers a dissolving corporation an unsupervised, 
“default”52 procedure under which the corporation must, within three years of 
dissolution, “adopt a plan of distribution” that reasonably provides for: (i) all 
claims known to the corporation, (ii) any suits pending against the corporation, and 
(iii) claims that “are likely to arise or to become known to the corporation or 
successor entity within 10 years after the date of dissolution.”53  Section 281(b) 
provides that any assets that remain after the dissolved corporation has paid 
existing claims and provided for pending and future claims “shall be distributed to 
the stockholders of the dissolved corporation.”54  Compliance with either §§ 280-
281(a) or § 281(b) shields directors and shareholders of the dissolved corporation 
from post-dissolution liability to third party claimants.55 
                                                 
52 We refer to § 281(b) as a default procedure, because a dissolving corporation that does not 
follow §§ 280-281(a) is statutorily required to follow the procedure prescribed by § 281(b). 
53 8 Del. C. § 281(b). 
54 Id.  
55 Id. §§ 281(c), 282; In re RegO Co., 623 A.2d at 97 (noting that following the court-supervised 
procedure affords directors of a dissolving corporation greater protection because “compliance 
with [§ 281(b)]'s standard, “reasonably likely to be sufficient” will, in principle at least, always 
be litigable”).  Section 281(b) imposes on dissolving corporations a stand-alone obligation to 
adopt a plan of dissolution before the expiration of § 278’s three year period.  But, the only 
consequence of non-compliance with that provision is that the directors and shareholders of the 
dissolved corporation will be denied the benefit of the safe harbors afforded by §§ 281(c) and 
282.  Thus, a primary benefit that flows from compliance with § 281(b) would appear to be the 
availability of those safe harbors.  
 
22
To be precise, those provisions do time-bar certain claims against a 
dissolved corporation—but only in specified, narrow circumstances.  Section 
280(a)(2) bars any claim in cases where a known, existing claimant, who was 
given actual notice by the dissolving corporation as prescribed in § 280(a)(1), fails 
to present the claim to the corporation “by the date referred to in paragraph (a)(1)c 
. . . .”56  Subparagraph 4 similarly bars claims against a dissolved corporation 
brought by a claimant whose presented claim was rejected by the corporation and 
who “does not commence an action, suit or proceeding with respect to the claim no 
later than 120 days after the mailing of the rejection notice.”57  On the face of these 
statutes, only the above-described two categories of claims—but no others—are 
time-barred.   
 
Nor do the five and ten year claims planning periods outlined in §§ 280(c)(3) 
and 281(b) operate more broadly to extinguish a dissolved corporation’s liability.  
By concluding otherwise, the Court of Chancery misread those statutes.  The only 
statutes that address liability in relation to those five and ten year periods are §§ 
281(c) and 282.  Section 281(c) provides that “[d]irectors of a dissolved 
corporation . . . which has complied with [the court-supervised or default 
distribution procedures] shall not be personally liable to the claimants of the 
                                                 
56 8 Del. C. § 280(a)(2).  
57 Id. § 280(a)(4). 
 
23
dissolved corporation.”58  Section 282 limits the liability of the shareholders of a 
dissolved corporation that has complied with either the court-supervised or the 
default claims planning procedures.  These provisions concern only the liability of 
directors and shareholders—not the liability of the dissolved corporation.   
Moreover, the legislative history of §§ 280-281 establishes that the five and 
ten year claims planning periods were not intended to operate as general statutes of 
limitation.  The primary benefit of, and incentive for, complying with either the 
court-supervised (§§ 280-281(a)) or the “default” (§ 281(b)) claims planning 
procedures is the “safe harbor” protection available to the directors and 
shareholders of the dissolved corporation.59  The 1990 amendments to §§ 280(c) 
and 281(b) required a dissolving corporation to provide for claims “likely to arise 
or to become known to the corporation . . . prior to the expiration of applicable 
statutes of limitation.”60  The General Assembly clearly contemplated that a 
dissolved Delaware corporation could continue to be liable to third parties long 
after its formal dissolution.  Nonetheless, the imprecision of the planning period 
language in the 1990 versions of §§ 280(c) and 281(b) (“prior to the expiration of 
applicable statutes of limitation”) made it difficult for directors to take advantage 
                                                 
58 Id. § 281(c) (emphasis added). 
59 See Gans, 1990 WL 2851, at *8. 
60 67 Del. Laws, c.376, §§ 24, 27 (1990). 
 
24
of that protection in the case of “long-tail” tort claims, because those statutory 
provisions “in effect, provide[d] no limitation for planning . . . purposes.”61  To 
provide the needed precision, the Delaware General Assembly amended §§ 280(c) 
and 281(b) in 1994 to require that a dissolving corporation provide for claims 
likely to arise “within 5 years” (§ 280(c)) or “within 10 years” (§ 281(b)) from the 
date of dissolution.62 The synopsis of the amendments to §§ 280 and 281 explained 
that those changes “provide[d] a temporal limitation on the claims for which a 
dissolved corporation . . . must make provision . . . .”  That same synopsis 
explained that other amended provisions of § 280 (i.e., § 280(a)(2) and (4)) 
“barred” certain claims.  Had the General Assembly intended the ten year period to 
operate as a limitations time bar, that body would have clearly expressed that intent 
in either the synopsis or in the statutory language. 
The Court of Chancery’s conclusion that §§ 280-282 shield the dissolved 
corporation from liability finds no support in those statutes’ plain language or 
legislative history.63   
                                                 
61 In re RegO Co., 623 A.2d at 102 n.27; see also 2 DAVID A. DREXLER ET AL., DELAWARE 
CORPORATION LAW AND PRACTICE § 38.05[5] (2012). 
62 69 Del. Laws, c.266, §§ 15, 20 (1994). 
63 See 1 R. FRANKLIN BALOTTI & JESSE A. FINKELSTEIN, THE DELAWARE LAW OF CORPORATIONS 
& BUSINESS ORGANIZATIONS § 10.18 (3d ed. 2011) (explaining that the court-supervised 
procedure under §§ 280-281(a) “does not operate as a statute of limitations and does not 
extinguish any claims . . . against the dissolved corporation”).  
 
25
4. 
The Corporation’s Contrary Arguments 
The Corporation advances four arguments as support for the Court of 
Chancery’s determination that the liability insurance policies do not constitute 
“property” of the Corporation.  First, the Corporation argues that, because §§ 280 
and 281 do not require a dissolving corporation to set aside assets for claims that 
may arise after ten years from the date of dissolution, those provisions necessarily 
extinguish a dissolved corporation’s post-dissolution liability to third parties after 
the ten year period expires.64  That argument lacks merit.  
The apparent premise of the Corporation’s argument is that, because 
§§ 281(a) and (b) require a dissolved corporation to distribute to its shareholders 
any “remaining assets” not set aside for or paid to claimants, the dissolved 
corporation will have no assets after ten years from the date of dissolution from 
which late-arriving claimants could recover.  That premise is misconceived.  A 
determination of the “remaining assets” that can be distributed to shareholders 
must be based on the distributable assets that exist, and on the dissolving 
corporation’s estimates of the value of pending and future claims, at the time the 
plan of distribution is adopted.  If the assets set aside to provide for pending claims 
and for claims likely to arise within ten years after dissolution exceed the value of 
                                                 
64 The Corporation also claimed during oral argument that the liability of a dissolved corporation 
is extinguished upon the expiration of the three year winding-up period provided for in § 278.  
 
26
the claims actually brought within that period, the dissolved corporation will 
continue to have net assets on the tenth anniversary of its dissolution.  Moreover, 
even after any initial distribution to shareholders, the dissolved corporation could 
continue to hold any contingent assets that would vest thereafter to satisfy creditor 
claims.  There is no statutory requirement that the dissolved corporation must 
distribute to shareholders all assets that remain after any initial asset distribution to 
creditors or shareholders.65  
The Corporation’s argument would also lead to results that are inconsistent 
with a ten year time bar.  Because (in the Corporation’s view) the planning 
procedure under § 281(b) leaves no assets available for claims brought after ten 
years from the date of dissolution, § 281(b) must (the Corporation contends) 
operate as a general ten year statute of limitations.  But, § 281(b) requires only that 
a dissolving corporation provide for claims that are “likely to arise . . . within 10 
years after the date of dissolution”—not all claims that will arise.66  The 
Corporation’s interpretation would also bar claims that were unforeseen at the time 
of dissolution yet were timely because they were brought within ten years after 
dissolution. 
                                                 
65 See DREXLER ET AL., supra note 61, § 38.05[6]. 
66 8 Del. C. § 281(b) (emphasis added). 
 
27
Ultimately, neither the plain language nor the legislative history of §§ 280-
282 support the conclusion that those provisions operate as a ten year statute of 
limitations.   
Second, the Corporation argues that § 279 does not subject the Corporation 
to third party liability, because liability insurance cannot be considered a “property 
right” in the absence of a final judgment against the insured.67  As support, the 
Corporation cites decisions of courts of other jurisdictions.68  But, the cited 
decisions interpret statutes that are dissimilar to Delaware’s.  Two of those cases, 
Blankenship v. Demmler Mfg. Co. and In re All Cases Against Sager Corp., turned 
on the interpretation of the Illinois dissolution statute,69 which explicitly barred 
claims against a dissolved corporation filed more than five years after dissolution.70  
The courts in Sager and Blankenship held that where a dissolved corporation is 
                                                 
67 The Corporation also argues that the defense and resolution of newly commenced lawsuits 
does not constitute “unfinished business” under § 279. Petitioners do not argue that a receiver 
should be appointed to settle “unfinished business” independent of the Corporation’s 
undistributed property.  Thus, we do not address whether the defense of newly filed lawsuits 
would constitute “unfinished business” under § 279 in the absence of undistributed property.  
68 The Corporation also points to a passing mention of liability insurance in the dicta of In re 
Citadel, addressing whether a dissolved corporation may be revived under § 278, as evidence 
that insurance policies are not considered “property” under 8 Del. C. § 279. In re Citadel Indus., 
Inc., 423 A.2d at 506. We find this evidence unpersuasive.  
69 In re All Cases Against Sager Corp., 967 N.E.2d 1203, 1210 (Ohio 2012); Blankenship v. 
Demmler Mfg. Co., 411 N.E.2d 1153, 1156 (Ill. App. Ct. 1980).  
70 In re Sager, 967 N.E.2d at 1210.  At the time Blankenship was decided, the relevant statutory 
period was two years. Blankenship, 411 N.E.2d at 1156. 
 
28
immune from suit, insurance policies have no value.71  However, because the 
Delaware dissolution statutes impose no such time bar, Blankenship and Sager are 
inapposite. 
Third, the Corporation contends that the recent decision in In re Texas 
Eastern Overseas, Inc. (TEO)72 is distinguishable and does not accurately state 
Delaware law.  The Corporation argues that in TEO, the insurance policies had 
value because the relevant claims were filed less than ten years after dissolution, 
whereas the claims at issue here were filed more than ten years after dissolution.  
That is a distinction without a difference.  As we have held, the expiration of ten 
years does not operate to extinguish a dissolved corporation’s liability to third 
parties.  The Corporation also points to the Court of Chancery’s observation in a 
footnote that its holding would “avoid a reordering of societal risk allocation from 
the insurers.”73  That observation (the Corporation argues) evidences a faulty 
understanding of Delaware public policy.  We need not address this argument, 
because our holding in this case does not rest on policy-based considerations.   
                                                 
71 In re Sager, 967 N.E.2d at 1210-11; Blankenship, 411 N.E.2d at 1157. The case applying 
Michigan law cited by the Corporation similarly deals with a dissolution statute that explicitly 
bars claims filed after a certain point. Gilliam v. Hi-Temp Products Inc., 677 N.W.2d 856, 874 
(Mich. Ct. App. 2003).  
72 In re Texas E. Overseas, Inc., 2009 WL 4270799. 
73 Id. at *5 n.37. 
 
29
The Corporation next argues that allowing the lawsuits to proceed through 
the office of a court-appointed receiver would violate Delaware’s prohibition 
against direct actions against insurers.  This argument fails because the 
Corporation has not shown how the appointment of a receiver would lead to a 
direct action against the Insurers.  The named defendant in Petitioners’ asbestos 
claims is, and would continue to be, the (insured) Corporation.  A receiver would 
simply participate in the litigation on the dissolved Corporation’s behalf.   
C. 
A Receiver Must be Appointed for the Dissolved Corporation to 
Participate in Litigation Brought More than Three Years After 
Dissolution 
 
 
Lastly, we hold that the Court of Chancery erred by accepting the Insurers’ 
representation that the Corporation would continue to litigate those claims filed 
within ten years of the Corporation’s dissolution, and by concluding, based on that 
representation, that that assurance rendered the Petition “non-justiciable.”  As a 
pure matter of statutory law, the Corporation presently lacks any authority to 
continue managing the winding-up of its business, which includes defending 
lawsuits brought against it.  Only if a receiver is appointed can the Corporation 
lawfully obtain that authority.    
After the expiration of § 278’s three year winding-up period, the dissolved 
Corporation ceased to exist as a “body corporate,” and lost the power to conduct its 
 
30
own affairs.74  From that point onward, the Corporation continued “solely for the 
purpose of [any] action, suit or proceeding” commenced before the expiration of 
the three year period.75  For all other purposes, including defending lawsuits 
brought against it after the three year period, the Corporation ceased to exist as a 
“body corporate,” and by statute lost its authority to manage its unfinished 
business.76  That the Corporation’s Insurers are continuing to defend those lawsuits 
on the Corporation’s behalf cannot re-infuse the Corporation with a legal existence 
that by statute has terminated.  The only means by which the Corporation may 
become re-empowered to defend its interests in the litigation is through the 
appointment of a receiver under § 279.77  Consequently, the Court of Chancery 
erred by denying relief under § 279 based on the assurances of a non-existent, 
dissolved corporation’s insurers that they would continue to defend against 
pending litigation.  It follows that to hold that those assurances rendered the 
Petition “non-justiciable” was also legal error.  The availability—indeed the 
                                                 
74 In re Citadel Indus., Inc., 423 A.2d 500, 504 (Del. Ch. 1980) (citing Harned v. Beacon Hill 
Real Estate Co., 80 A. 805 (Del. Ch. 1911) aff'd sub nom. Harned v. Beacon Hill Real Estate 
Co., 84 A. 229 (Del. 1912)). 
75 8 Del. C. § 278. 
76 In re Citadel Indus., Inc., 423 A.2d at 503-04, 507. 
77 See In re Dow Chem. Int'l Inc., 2008 WL 4603580, at *1 (“[O]nce the three-year period has 
expired and there is no pending litigation or assets to be disposed of, the Court no longer has 
discretion to ‘continue’ the corporate existence under § 278.”); In re Citadel Indus., Inc., 423 
A.2d at 504, 507. 
 
31
necessity—of a court-appointed receiver under § 279 made the Petition ripe for 
judicial determination.  
V. 
CONCLUSION 
For the foregoing reasons, we reverse the grant of summary judgment and 
remand to the Court of Chancery for further proceedings in accordance with this 
Opinion.  Jurisdiction is not retained.