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Delaware Chancery Court Victory for Liberty Media


NEW YORK, April 29, 2011 -- Vice-Chancellor J. Travis Laster of the Delaware Chancery Court issued judgment today for Baker Botts client Liberty Media Corporation in litigation against The Bank of New York Mellon, as trustee under the indenture governing the public indebtedness of a Liberty subsidiary.

Liberty brought this action following threats made by bondholders that Liberty’s announced split-off of its Capital Group and Starz Group tracking stocks would violate the indenture by constituting a disposition of “all or substantially all” of the issuer’s assets, when taken together with prior spin-off transactions.

Following a three day trial and additional post-trial argument, the Court issued a 35-page opinion holding that the pending split-off does not violate the terms of the indenture. The Court rejected the trustee’s argument that, by aggregating three prior Liberty asset distributions occurring over a 7-year period, the pending split-off would trigger a default under the indenture.

Vice-Chancellor Laster reasoned that the current split-off is not “sufficiently connected” to the prior transactions so as to provide a basis for integrating all the transactions in conducting the analysis.

Baker Botts Litigation partner Rich Harper and Corporate partners Renee Wilm and Buzz McGrath (all of the New York office) led the litigation for Baker Botts, working closely with Delaware counsel, Potter Anderson & Corroon LLP. McGrath and Wilm are also lead corporate counsel on the pending split-off.

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