MFW’s Ab Initio Requirement Not Satisfied When Controlling Stockholder Negotiated with Minority Stockholder Before Acceding to “[D]ual [P]rotections”
Robert S. Reder & Connor J. Breed | 74 Vand. L. Rev. En Banc 397 (2021) |
In In re HomeFed Corp. S’holder Litig., No. 2019-0592-AGB, 2020 Del. Ch. LEXIS 235 (Del. Ch. July 13, 2020) (“HomeFed”), the Delaware Court of Chancery (“Chancery Court”) denied pleading-stage dismissal of claims challenging a controlling stockholder-led buyout. In so ruling, Chancellor Andre G. Bouchard determined that the defendants—the controlling stockholder and members of the target company board of directors—were not entitled to the protection of the deferential business judgment rule despite purported compliance with the MFW Playbook developed by the Delaware Supreme Court in 2014.
AUTHORS:
Robert S. Reder
Connor J. Breed