Investor, know thyself.

Originally published by David Coale.

Centerboard Securities sued Benefuel for not paying certain “success fees” on two transactions. Benefuel countered that the transactions were not “investments” within the meaning of their contract, as they included debt and equity aspects instead of solely equity. Tthe Fifth Circuit disagreed: “The term ‘investment’ is unambiguous and includes debt and equity. . . . Delaware courts have used the term ‘investment’ to refer to equity and debt.” Similarly, the phrase “current investor” in the contract could not be read to include a party’s subsidiaries or affiliates: “Delaware courts take the corporate form and corporate formalities very seriously. . . . and will disregard the corporate form only in the ‘exceptional case.’” Centerboard Securities LLC v. Benefuel Inc., No. 17-10344 (March 12, 2018) (citations omitted).

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