COURT OF CHANCERY

OF THE 

STATE OF DELAWARE

 JOHN W. NOBLE 417 SOUTH STATE STREET

VICE CHANCELLOR DOVER, DELAWARE 19901

 TELEPHONE: (302) 739-4397

 FACSIMILE: (302) 739-6179

December 29, 2015

Stephen P. Lamb, Esquire Kevin G. Abrams, Esquire

Paul, Weiss, Rifkind, Wharton J. Peter Shindel, Jr., Esquire 

 & Garrison LLP Abrams & Bayliss LLP 

500 Delaware Avenue, Suite 200 20 Montchanin Road, Suite 200 

Wilmington, DE 19801 Wilmington, DE 19807

Re: AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

Date Submitted: July 23, 2015 

Dear Counsel:

These two actions are proceeding in tandem.

1

In essence, the Renco Group, 

Inc. and affiliates (“Renco”) are in a dispute with MacAndrews & Forbes Holdings 

Inc. and affiliates (“M&F”) about their inter-related investments in Nominal 

Defendants AM General Holdings LLC (“Holdco”) and Ilshar Capital LLC

 

1 Background can be gleaned from any of several earlier opinions. See AM Gen. 

Hldgs. LLC ex rel. Ilshar Capital LLC v. Renco Gp., Inc., 2013 WL 5863010, at *1 

n.1 (Del. Ch. Oct. 31, 2013) (collecting some past opinions). Perhaps an 

understanding of the complex relationships among the various parties can be 

obtained from one of those opinions.

EFiled: Dec 29 2015 04:16PM EST 

Transaction ID 58352955

Case No. Multi-Case
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 2

(“Ilshar”). Currently pending are two motions: M&F has moved to compel 

discovery; Renco seeks a preliminary injunction to require M&F to provide it with 

certain operating information regarding Holdco.

A. Discovery

The parties have worked to reduce the scope of their discovery disputes. 

Two issues, under the umbrella of M&F’s Motion to Compel, remain.

First, M&F seeks Ilshar’s statement of assets and liabilities.2 Renco 

plausibly argues that M&F’s informational rights are set forth in the carefully and 

comprehensively negotiated Amended and Restated Limited Liability Company 

Agreement of Ilshar Capital LLC (the “Ilshar Agreement”). This, however, is not 

only a matter of contractual informational rights. In addition, M&F has sought 

discovery in the context of litigation in which Ilshar’s financial condition—and the 

various investments made and liabilities assumed on its behalf by Renco—is fairly 

at issue. For example, M&F has presented colorable claims that improper 

 

2

Ilshar is under the direct operational control of Renco’s affiliate, ILR Capital 

LLC.
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 3

investments (as prohibited by the Ilshar Agreement) have been made. In order to 

develop this claim, an understanding of what the investments (assets) are and what 

the obligations (liabilities) are has become a proper objective of discovery. Assets 

and liabilities are relevant; that information is not privileged. The contractual 

informational rights of the parties do not override or otherwise limit basic 

discovery expectations. Renco shall provide M&F with Ilshar’s statements of 

assets and liabilities as prepared over the preceding twelve months.

Second, M&F seeks to learn how Renco was able to post a supersedeas bond 

to facilitate an appeal from a significant monetary judgment awarded against it in 

New York. In other words, M&F wants to make sure that Renco has not pledged

(or otherwise used) the assets (broadly defined) of Ilshar to obtain the bond. Renco 

has denied using Ilshar’s assets in the bonding effort. Given the lack of trust 

between the two sides, M&F’s skepticism may be understandable, but skepticism 

does not automatically open the door to the financial details of a contractual 

counterparty. Where Renco found the funding—as long as it was not tied to 

Ilshar—is neither relevant to these proceedings nor likely to lead to the discovery 
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 4

of admissible evidence. Moreover, presumably, if Ilshar’s assets were pledged in 

some fashion to help with the bonding process, Ilshar’s statement of assets and 

liabilities should reflect the obligation. For these reasons, M&F’s motion to 

compel is denied as to any external sources (i.e., sources other than Ilshar) for 

support of the supersedeas bond. A more developed factual basis for this 

discovery request may justify its renewal.

B. Preliminary Injunction

Renco seeks “a preliminary injunction enjoining [Defendants] from 

depriving Renco of its informational rights under the [Holdco Agreement].”

3

 More 

specifically, it asks the Court to “grant Renco’s requested injunction and require 

the [Defendants] to honor Renco’s unambiguous contractual rights by . . . requiring 

the [Defendants] to (1) permit Renco and an authorized representative to inspect 

 

3

Pl. The Renco Gp., Inc.’s Mot. for a Prelim. Inj. to Enforce its Rights Under the 

Holdco Agreement. The Limited Liability Company Agreement of AM General 

Holdings LLC (the “Holdco Agreement”) appears as Exhibit A to the Affidavit of 

William J. Natbony in Supp. of its Appl. for a Prelim. Inj. to Enforce its Rights 

Under the Holdco Agreement.
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 5

and examine Holdco’s and AM General’s books of account and (2) provide Renco 

with all monthly reporting relating to the AM General Business since May 2013.”4

Renco invokes Section 10.1(a) of the Holdco Agreement, which provides in 

pertinent part:

At all times during the continuance of the Company, the Company 

shall maintain . . . separate books of account for the Company and 

AM General that shall show a true and accurate record of all costs and 

expenses incurred . . . all charges made, all credits made and received 

and all income derived in connection with the operation of the 

Company business . . . . In accordance with Section 18-305 of the 

Delaware [Limited Liability Company] Act, such books of 

account . . . shall at all times be open to inspection and examination at 

reasonable times by each Member and its duly authorized 

representative for any purpose reasonably related to such Member’s 

interest as a member of the Company.

Renco also relies upon Section 15.14 of the Holdco Agreement, which provides in 

pertinent part:

The parties hereto agree that any party by whom this Agreement is 

enforceable shall be entitled to specific performance in addition to any 

other appropriate relief or remedy. Such party may . . . apply to a 

 

4 Renco’s Appl. for a Prelim. Inj. to Enforce its Rights Under the Holdco 

Agreement at 3–4. “AM General” refers to AM General LLC, which is the 

operating entity held by Holdco.
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 6

court of competent jurisdiction for . . . injunctive or such other relief 

as such court may deem just and proper in order to enforce this 

Agreement or prevent any violation hereof and, to the extent 

permitted by applicable law, each party waives any objection to the 

imposition of such relief.

In Renco Group, Inc. v. MacAndrews AMG Holdings LLC,

5

the Court looked 

to that language in concluding that the irreparable injury prong of the preliminary 

injunction standard was satisfied.6 Thus, Renco understandably argues, under the 

law of the case doctrine,7that Renco’s burden of showing irreparable harm has 

been waived or otherwise satisfied for purposes of this proceeding.

The preliminary problem is procedural. Renco has not invoked statutory 

rights to obtain books and records in the traditional sense.8 Similarly, it has not 

used the Court’s discovery rules. To an extent, the question for the Court is 

whether Renco’s label for the relief it seeks—that of a preliminary injunction—

 

5

2013 WL 3369318, at *11 (Del. Ch. June 19, 2013) (the “June 2013 Opinion”).

6

See also AM Gen. Hldgs. LLC v. Renco Gp., Inc., 2012 WL 6681994, at *5–6 

(Del. Ch. Dec. 21, 2012) (the “December 2012 Opinion”) (considering the effect of 

a nearly identical provision in the Ilshar Agreement).

7

See May v. Bigmar, Inc., 838 A.2d 285, 288 (Del. Ch. 2003), aff’d, 854 A.2d 

1158 (Del. 2004).

8

See 6 Del. C. § 18-305.
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 7

should guide its analysis or whether the Court should look more broadly at the 

substance of Renco’s request which would, at least as a general matter, fit more 

conveniently under a books and records or discovery request. Although the latter 

approaches would seem more efficient, the Court, somewhat reluctantly, concludes 

that it should address the question as framed by Renco.

The June 2013 Opinion that Renco cites did not establish that Section 15.14 

by itself satisfied the element of irreparable harm.9 An accompanying footnote 

clarified the provision’s role in analysis as ancillary, not independently sufficient.10

Further, after finding that two of the preliminary injunction inquiry’s three 

prongs—probability of success on the merits and the proper balancing of 

equities—were absent for the relief Renco sought, that opinion declined to grant 

the relief contemplated in Renco’s motion.

11 Instead, the Court fashioned

equitable relief to address then-existing concerns in a manner not envisioned by the 

 

9

See Renco Gp., 2013 WL 3369318.

10 Id. at *11 n.94. 

11 Id. at *10–13. 
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 8

movant but nonetheless supported by the record.

12 There, Renco had sought orders 

requiring AMG to reallocate certain distributions and cease any future distributions 

to AMG pending appraisal, but the relief the Court ordered accomplished neither; 

rather, the Court crafted a “limited injunction” allowing AMG to make 

distributions so long as it provided Renco “a summary of its determination of the 

Revalued Capital Accounts fifteen calendar days” before doing so.13 For all of 

these reasons, it is far from clear that the June 2013 Opinion “decided” the issue of 

irreparable harm for purposes of this proceeding under the law of the case 

doctrine.14

Nor did the December 2012 Opinion issued in one of these parallel 

proceedings.

15

 There, Holdco sought and received a mandatory preliminary 

injunction requiring Renco to comply with certain contractual provisions that 

 

12 Id. at *13.

13 Id. at *1, 13.

14 See May, 838 A.2d at 288 n.8 (“The ‘law of the case’ doctrine requires that 

issues already decided by the same court should be adopted without 

relitigation . . . .” (emphasis added)). 

15 See AM Gen. Hldgs., 2012 WL 6681994, at *4–7.
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 9

would resolve a dispute over the rightful ownership of $48,658,515 that Ilshar had 

retained.16 This Court reasoned that particularly strong showings with respect to 

the elements of probability of success on the merits and balancing of the equities 

overcame Holdco’s comparatively weak showing of irreparable harm.17 Two 

aspects of Holdco’s irreparable harm theory influenced the December 2012 

Opinion’s ultimate holding: (1) contractual waiver as reflected in a similar 

provision in the Ilshar Agreement and (2) the fact that Renco had deprived Holdco 

of the corporate governance process by bypassing an applicable contractual 

framework.18 Just like the June 2013 Opinion, the December 2012 Opinion 

recognized that a contractual waiver provision does not necessarily satisfy the 

element of irreparable harm because each decision weighs it as one relevant, and 

sometimes significant, contributor informing whether the flexible preliminary 

injunction standard was met. Accordingly, neither opinion establishes that the 

 

16 Id. at *1–2, 7.

17 Id. at *7.

18 Id. at *5.
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 10

waiver provision conclusively satisfies the element of irreparable harm under May

v. Bigmar. In short, the context of its application cannot be ignored.

Further, Renco has not shown that it is suffering irreparable harm due to its 

informational shortage. No doubt, it is inconvenient, but irreparable harm in the 

absence of interim injunctive relief is a necessary showing. Parties sometimes, as 

Renco and M&F did here, agree that contractual failures are to be deemed to 

impose the risk of irreparable harm. Such an understanding can be helpful when 

the question of irreparable harm is a close one.19 Parties, however, cannot in 

advance agree to assure themselves (and thereby impair the Court’s exercise of its 

well-established discretionary role in the context of assessing the reasonableness of 

interim injunctive relief) the benefit of expedited judicial review through the use of 

a simple contractual stipulation that a breach of that contract would constitute 

irreparable harm.20

 

19 See Renco Gp., 2013 WL 3369318, at *11 n.94.

20 In part, this is simply a matter that allocation of scarce judicial resources is a 

judicial function, not a demand option for litigants. In the preliminary injunction

dispute resolved in the December 2012 Opinion, there was a fundamental 
AM General Holdings LLC v. The Renco Group, Inc.

 C.A. No. 7639-VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

 C.A. No. 7668-VCN

December 29, 2015

Page 11

Because the irreparable harm standard has not been met, the motion for a 

preliminary injunction is denied.

IT IS SO ORDERED.

Very truly yours,

/s/ John W. Noble

JWN/cap

cc: Thad J. Bracegirdle, Esquire

Joel Friedlander, Esquire

Register in Chancery-K

 

breakdown—or so it was alleged—in both corporate governance and cash flow 

aspects of a party’s investment. AM Gen. Hldgs., 2012 WL 6681994, at *1–2. The 

Court is not suggesting that Renco’s concerns are not significant; it is just noting 

that they do not carry the criticality of M&F’s claims that were addressed earlier in 

these proceedings.