Cadwalader, Wickersham & Taft LLP
MONTH-IN-BRIEF (Apr 2024)
Business Litigation
Delaware Court of Chancery Departs from Historical Practices and Awards Compounded Prejudgment Interest
In Brown v. Court Square Capital Management, L.P., the Delaware Court of Chancery departed from tradition by awarding compound prejudgment interest to the plaintiff. Kevin Brown, a former partner at Court Square Capital Management, L.P. (“Court Square”), sued his former employer after it stopped paying him his share of carried interest. The court ruled in Brown’s favor and ordered Court Square to repay Brown all owed carried interest, ongoing carried interest, prejudgment interest, post-judgment interest, and interest on a per diem basis for each wrongfully withheld interest payment.
At issue was whether the prejudgment interest would be calculated as simple interest or compound interest. Prejudgment interest serves two purposes—compensatory and restitutionary. It both compensates the plaintiff for the loss of their money and forces the defendant to relinquish any benefit obtained by retaining the plaintiff’s money during the litigation.