Three recent decisions by Delaware courts have addressed the appropriateness of equitable relief to acquire funds held in escrow post-closing of a transaction. In all three decisions, the Delaware courts (the Court of Chancery twice and the Superior Court once) concluded that the Court of Chancery’s equitable jurisdiction provided the most “certain, prompt, complete and efficient” relief. A common thread among these three cases is their reliance on a 2013 transcript ruling in SecNet Holding v. Potash, No. 7781-VCP (Del. Ch. April 2, 2013).
In SecNet, the Court of Chancery ordered a nonparty escrow agent to release $750,000 held in an escrow account, concluding that even if the plaintiff could obtain a judgment for the funds in escrow in a court of law (i.e., damages), the equitable power to enforce that judgment rests with the Court of Chancery (i.e., specific performance). Therefore, a legal remedy would be inadequate and not as certain, prompt, complete or efficient as an equitable remedy.
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