TransPerfect Co-CEO to Pay $7.1M for Alleged Misconduct

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By Leslie A. Pappas

Aug. 22 — Philip R. Shawe, co-CEO of New York-based translation company TransPerfect Global Inc., must pay more than $7.1 million to the company's other co-CEO for alleged misconduct during the pair's ongoing battle for control of the company ( In re Shawe & Elting LLC, Del. Ch., No. 9661-CB, 8/19/16 ).

The Delaware Chancery Court's Aug. 19 order follows a July 20 ruling in which the court sanctioned Shawe to pay co-chief executive officer Elizabeth Elting's legal fees for allegedly lying to the court and obstructing discovery during the case (140 SLD, 7/21/16).

The $7,103,755 award was less than the $7,961,390 in attorneys' fees and expenses that Elting asked for.

In an Aug. 19 statement, one of Elting's lawyers, Philip S. Kaufman of Kramer Levin Naftalis & Frankel LLP, said Elting “is gratified that the court continues to rule in her favor while holding Mr. Shawe accountable for his extraordinary misconduct.”

Shawe told Bloomberg BNA in an Aug. 22 e-mail that he is “completely innocent of all wrongdoing.” Shawe also described the amount of the award as “unprecedented and outrageous.”

Long-Running Battle

The recent sanctions are a small part of a long-running battle between the co-CEOs over control of the company. In August 2014, the Supreme Court of the State of New York, finding misconduct on both sides and concluding that it was “not clear who drew first blood,” dismissed Elting's motions to remove Shawe as director and dissolve the company.

Just one year later in Delaware, where the company is incorporated, Chancellor Andre Bouchard appointed a custodian to sell TransPerfect because Shawe and Elting's conflicts had become so dysfunctional they threatened the company's well-being (119 SLD, 6/21/16). The court affirmed a plan of sale June 20; Shawe is appealing all the Delaware rulings.

One of Shawe's attorneys, Martin P. Russo of Gusrae Kaplan Nusbaum PLLC, told Bloomberg BNA in an Aug. 22 e-mail that Shawe was tried and sanctioned “without due process,” and the decision reflects “an extreme court bias against Mr. Shawe.”

The case has been certified for interlocutory appeal, meaning that the court chancellor has agreed that it is important enough to warrant Delaware Supreme Court review at this time, Russo told Bloomberg BNA.

“The reason for an interlocutory appeal here is to minimize the damage to the company that might be caused if a sale were consummated before a successful appeal,” Russo said. “You can't unscramble the egg.”

Shawe continues to offer Elting $300 million in cash for her shares of the company, Russo said.

To contact the reporter on this story: Leslie A. Pappas in Philadelphia at lpappas@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

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