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Delaware Corporate Law Bulletins Category

MFW DEFENSE AVAILABLE DESPITE CONTROL STOCKHOLDER’S REFUSAL TO NEGOTIATE WITH CREDIBLE COMPETING BIDDER

Jan. 30, 2024—Robert S. Reder | 77 Vand. L. Rev. En Banc 39 In Smart Local Unions and Councils Pension Fund v. BridgeBio Pharma, Inc., C.A. No. 2021-1030-PAF (Del. Ch. December 29, 2022) (“BridgeBio Pharma”), the Delaware Court of Chancery (“Chancery Court”) examined the negotiation and approval process underlying a control stockholder’s buyout of minority shares via...

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TYPE I VS. TYPE II: DELAWARE COURTS DISCUSS ENFORCEABILITY OF PRELIMINARY AGREEMENTS

Oct. 22, 2023—Robert S. Reder & Evan T. Kowalski | 76 Vand. L. Rev. En Banc 133 (2023) | When parties to commercial negotiations reach an agreement on certain basic transaction terms but are not yet ready to proceed to definitive documentation, they frequently will sign a preliminary agreement—usually called a letter of intent or an agreement in...

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“CHALKING UP A VICTORY FOR DEAL CERTAINTY”: CHANCERY COURT REINFORCES HIGH BAR TO ESTABLISHING “MAE” IN CONNECTION WITH IMPACT OF COVID-19

Oct. 22, 2023—Robert S. Reder & Zachary R. Ryan | 76 Vand. L. Rev. En Banc 119 (2023) | Market dislocations associated with the rapid spread of COVID19 beginning in early 2020 presented parties to pending M&A transactions with two thorny issues under the documentation governing their transactions: first, which party bore the risk of pandemic-related damage to...

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APPLICATION OF MFW FRAMEWORK DEFEATS CHALLENGE TO CORPORATE CHARTER AMENDMENT FAVORING CONTROL STOCKHOLDER

Sep. 29, 2023—Robert S. Reder & Kathryn A. Fish | 76 Vand. L. Rev. En Banc 111 (2023) | In City Pension Fund for Firefighters and Police Officers in Mi- ami v. The Trade Desk, Inc., C.A. No. 2021-0560-PAF (Del. Ch. July 29, 2022) (“The Trade Desk”), the Delaware Court of Chancery (“Chancery Court”) examined the approval...

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DELAWARE SUPREME COURT REQUIRES STOCKHOLDER VOTE TO APPROVE COMPANY’S TRANSFER OF PLEDGED ASSETS TO SATISFY DEFAULTED DEBT

Sep. 28, 2023—Robert S. Reder | 76 Vand. L. Rev. En Banc 101 | Stream TV Networks, Inc. (“Stream” or the “Company”), a company in difficult financial straits, found itself unable to repay its considerable debt. Repayment of this debt was secured by a pledge of all Company assets to the secured creditors. Facing default and a potential...

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CHANCERY COURT DECLINED TO APPLY BLASIUS “COMPELLING JUSTIFICATION” STANDARD IN SUSTAINING BOARD’S REJECTION OF OPPOSITION SLATE UNDER “COMMONPLACE” ADVANCE NOTICE BYLAW

May. 12, 2022—Robert S. Reder & Gabrielle M. Haddad | 75 Vand. L. Rev. En Banc 195 (2022) | Under § 141(a) of the Delaware General Corporation Law (“DGCL”), “the business and affairs of every corporation . . . shall be managed by or under the direction of a board of directors . . . .” In light of this sweeping grant of authority to...

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CHANCERY COURT PROVIDES ADDITIONAL CLARITY ON DISCLOSURE REQUIREMENTS FOR ESTABLISHING CORWIN DEFENSE

May. 12, 2022—Robert S. Reder & Stanley N. Medlin | 75 Vand. L. Rev. En Banc 187 (2022) | At the other end of the spectrum, as explained by Vice Chancellor Sam Glasscock III in Galindo v. Stover, CA No. 2021-0031-SG (Del. Ch. Jan. 26, 2022) (“Galindo”), “directors need not provide exhaustive information in seeking a stockholder...

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THE WORDS MEAN WHAT THEY SAY: CHANCERY COURT ADHERES TO PLAIN MEANING OF TYPICAL CONTRACT TERMS

May. 12, 2022—Robert S. Reder & Paul W. d’Ambrosio | 75 Vand. L. Rev. En Banc 179 (2022) | In Yatra Online, Inc. v. Ebix, Inc., C.A. No. 2020-0444-JRS (Del. Ch. Aug. 30, 2021), Vice Chancellor Joseph R. Slights III ruled that a merger agreement provision stating “there shall be no liability on the part of any...

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CHANCERY COURT APPLIES “WELL-WORN FIDUCIARY PRINCIPLES” TO ADDRESS “NOVEL ISSUES” PRESENTED BY SPAC DISCLOSURE LITIGATION

May. 12, 2022—Robert S. Reder | 75 Vand. L. Rev. En Banc 167 (2022) | In In Re MultiPlan Corp. S’holders Litig., 268 A.3d 784 (Del. Ch. 2022) (“MultiPlan”), the Delaware Court of Chancery (“Chancery Court”) confronted—for the first time—litigation over one of the most popular devices currently available to privately-held businesses seeking “to access the public...

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MFW FRAMEWORK REQUIRES MAJORITY-OF-MINORITY STOCKHOLDER APPROVAL EVEN WHEN CONTROLLER STRUCTURES TRANSACTION TO AVOID STATUTORY STOCKHOLDER VOTE

May. 12, 2022—Robert S. Reder | 75 Vand. L. Rev. En Banc 157 (2022) | In Berteau v. Glazek, C.A. No. 2020-0873-PAF (Del. Ch. June 30, 2021) (“Berteau”), Vice Chancellor Paul A. Fioravanti, Jr. of the Delaware Court of Chancery (“Chancery Court”) confronted a “novel,” but ultimately “unpersuasive,” theory concerning the judicial standard of review applicable to...

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NECESSARY BUT NOT SUFFICIENT”: CHANCERY COURT CLARIFIES ROLE OF ENHANCED SCRUTINY IN ASSESSING DAMAGES CLAIMS AGAINST CORPORATE ACTORS IN REVLON TRANSACTIONS

Apr. 11, 2022—Robert S. Reder & Connor J. Breed | 75 Vand. L. Rev. En Banc 145 (2022) | Also explains that preliminary steps taken by self-interested corporate officers to tilt playing field for benefit of favored bidder may invite application of Revlon principles several months before board approval of sale transaction. PDF Download Link AUTHORS: Robert...

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SUPREME COURT ─ FINDING SELLER’S RESPONSES TO COVID-19 VIOLATED ORDINARY COURSE COVENANT, DESPITE LACK OF “MAE” ─ UPHOLDS CHANCERY DECISION ALLOWING BUYER TO ABANDON SIGNED TRANSACTION

Apr. 11, 2022—Robert S. Reder & Erin N. Embrey | 75 Vand. L. Rev. En Banc 133 (2022) | Disregarding similar measures taken by other industry participants in response to pandemic, Court finds that seller’s failure to obtain buyer’s consent to drastic (albeit reasonable) measures as required by sale agreement violated Ordinary Course Covenant. PDF Download Link...

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TOO MUCH DYNAMITE”: BUYER’S FRAUDULENT INDUCEMENT CLAIM SURVIVES SELLER’S DEFENSE BASED ON CONTRACTUAL LIMITATIONS ON POST-CLOSING LIABILITY

Apr. 11, 2022—Robert S. Reder & Zachary R. Ryan | 75 Vand. L. Rev. En Banc 123 (2022) | Chancery Court permits buyer to challenge allegedly fraudulent representations in purchase agreement, despite “remarkably robust” contractual provisions designed to shield seller and its affiliates from post-closing liability. PDF Download Link AUTHORS: Robert S. Reder Zachary R. Ryan

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Defusing the “[N]uclear [W]eapon of [C]orporate [G]overnance”: Chancery Court Enjoins “Extreme, Unprecedented” Poison Pill Adopted to Defend Against Hypothetical Stockholder Activism

Apr. 11, 2022—Robert S. Reder & Lisa Orucevic | 75 Vand. L. Rev. En Banc 109 (2022) | Chancery Court confirms that boards must justify adoption of an “extreme” form of stockholder rights plan based on actual threats perceived at the time of adoption, not on the possibility of “hypothetical future threats.” PDF Download Link AUTHORS: Robert...

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CHANCERY COURT EMPLOYS REVLON ANALYSIS IN ASSESSING WHETHER CORPORATE SALE PROCESS WAS REASONABLE

Apr. 11, 2022—Robert S. Reder & Connor J. Breed | 75 Vand. L. Rev. En Banc 97 (2022) | The court carves out role for enhanced scrutiny review while recognizing that personal liability requires defendant-by-defendant analysis. PDF Download Link AUTHORS: Robert S. Reder Connor J. Breed

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“THERE MOST CERTAINLY WAS A ‘TOMORROW’”: CHANCERY COURT FINDS REVLON REVIEW NOT TRIGGERED WHEN ACQUIRER STOCK CONSTITUTED 58% OF MERGER CONSIDERATION

Apr. 11, 2022—Robert S. Reder & Connor J. Breed | 75 Vand. L. Rev. En Banc 87 (2022) | Opinion also indicates that technical noncompliance with DGCL § 203 will not trigger supermajority voting requirements for a negotiated transaction not subject to “abusive takeover tactics.” PDF Download Link AUTHORS: Robert S. Reder Connor J. Breed

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