WILMINGTON, Del. (CN) - The Delaware Supreme Court vacated a default judgment of more than $750 million to investors who claimed they lost everything in a stock-for-stock exchange with Lernout & Hauspie Speech Products when the company went bankrupt less than a year after the deal was made.
Plaintiffs Stonington Partners and Stonington Holdings won default judgment when L&H's former executives, Pol Hauspie and Nico Willaert, failed to respond to the lawsuit for more than a year.
Normally, a failure to respond is the equivalent of admitting to all well-pleaded facts in the complaint. But a plaintiff is only entitled to default judgment if those facts state a claim for which relief can be granted, and the state high court said the plaintiffs failed to state a claim for fraud.
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