Court of Chancery Grants Section 220 Books and Records Demand Directed to Public Company’s Private Subsidiary, but Limits Scope of Documents Available to Plaintiff

Greenlight Capital Offshore Partners, Ltd. v. Brighthouse Financial, Inc., C.A. No. 2022-1067-LWW (Del. Ch. Nov. 20, 2023).

In an opinion evaluating the Section 220 books and records demand plaintiff Greenlight Capital Offshore Partners, Ltd. (“Greenlight”) made on defendant Brighthouse Financial, Inc. (“Brighthouse”), the Court of Chancery held that Greenlight had established a proper purpose for inspection of Brighthouse’s books and records, but that such inspection would be limited to the materials necessary, essential, and sufficient to satisfy such purpose.

Brighthouse is a public holding company that provides annuity and life insurance products through layers of subsidiaries and relies on capital inflows from its subsidiaries to meet obligations and pay dividends. Greenlight stated that the purpose of its Section 220 books and records demand was to determine the value of its Brighthouse shares, and in connection therewith, mainly requested financial information of Brighthouse Reinsurance Company of Delaware, Brighthouse’s captive subsidiary (the “Captive Subsidiary”), to assess the likelihood that Brighthouse would issue future dividends, similar to dividends paid in 2020 and 2021. Greenlight also requested minutes from meetings of the board of directors of Brighthouse and its subsidiaries. Brighthouse argued that the information requested by plaintiff was proprietary and unnecessary for the valuation of Greenlight’s shares.

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