Delaware Corporate Law Bulletins Category
Failure to Satisfy Four Prongs of MFW Framework Dooms Pleading-Stage Dismissal of Claims Arising from Controlling Stockholder-Led Redemption of Minority Shares
Mar. 12, 2021—Robert S. Reder & Kirby W. Ammons | 74 Vand. L. Rev. En Banc 47 (2021) | Dell Technologies offers significant guidance to dealmakers and their legal counsel for structuring commercial transactions involving controlling stockholders. Vice Chancellor Laster’s comprehensive opinion demonstrates that simply paying lip service to the “six necessary and sufficient conditions for obtaining...
Chancery Court Questions Whether Nominally Designated “Independent” Directors Satisfied Requirements of Stockholders Agreement
Mar. 12, 2021—Robert S. Reder & Eunice (Chan Mi) Lim | 74 Vand. L. Rev. En Banc 37 (2021) | Chancellor Bouchard’s blanket rejection of the Coty Stockholder Litigation defendants’ motions to dismiss demonstrates the Chancery Court’s refusal blindly to accept procedural safeguards purportedly put in place to protect minority stockholders. Instead, in the face of well-pled...
Chancery Court Again Rejects Motion by Large Minority Blockholder to Dismiss Fiduciary Breach Claims Under Corwin
Feb. 5, 2021—Robert S. Reder & G. Parker Kolodka | 74 Vand. L. Rev. En Banc 25 (2021) | Vice Chancellor Slights’s extension of the inherent coercion doctrine to the summary judgment phase in Tesla II demonstrates the risks faced by dealmakers who hope to rely on a Corwin defense when a potential controlling stockholder is in...
Chancery Court—Reiterating High Bar for Proving “MAE”—Requires Buyer to Honor Its Obligations Under Acquisition Agreement
Feb. 5, 2021—Robert S. Reder & Bailey R. Vincent | 74 Vand. L. Rev. En Banc 13 (2021) | Akorn, rather than straying from Chancery Court precedent, reiterated that the occurrence of a circumstance worthy of an MAE is rare. In Channel Medsystems, Channel’s ability ultimately to win FDA approval of the Product, coupled with BSC’s suspect...
Chancery Court Dismisses Revlon Claims Without Considering Directors’ Potential Corwin Defense
Jan. 25, 2021—Robert S. Reder & Anna Choi | 74 Vand. L. Rev. En Banc 1 (2021) | Essendant reinforces the heightened pleading standard a stockholder-plaintiff must overcome to survive a motion to dismiss its claims of directorial breach of fiduciary duty in the Revlon context. Absent well-pled facts challenging a board’s independence, disinterestedness, or good faith...
Chancery Court Refuses to Alter Contractual Allocation of Risk Between Sophisticated Parties
Dec. 30, 2020—Robert S. Reder & Marissa L. Barbalato | 73 Vand. L. Rev. En Banc 275 (2020) | In her opinion, Vice Chancellor Zurn instructed that Julius v. Accurus “teaches an important lesson about the benefits of allocating risk among contracting parties and detriments of imprecise drafting.” In essence, the Buyers were in search of a...
Despite Lack of Control Stockholder, Chancery Court Applies M&F’s “Ab Initio” Requirement in Determining Whether Independent Committee Recommendation Cleansed Transaction Approved by Conflicted Board
Dec. 30, 2020—Robert S. Reder & Colton Tyler Haney | 73 Vand. L. Rev. En Banc 265 (2020) | Salladay discusses the options available to corporate dealmakers and their legal counsel to obtain business judgment review—and ultimately pleading-stage dismissal—of conflicted transactions. If a controlling stockholder is to receive benefits from the transaction not shared with the other...
Chancery Court Enforces Contractual Termination Provision—but Questions Fairness of Related Termination Fee
Dec. 30, 2020—Robert S. Reder & Kenton B. Wilson | 73 Vand. L. Rev. En Banc 257 (2020) | In Vintage Rodeo Parent, LLC v. Rent-A-Center, Inc., No. 2018-0927-SG, 2019 Del. Ch. LEXIS 87 (Del. Ch. Mar. 14, 2019) (“Vintage Rodeo”), the Delaware Court of Chancery (“Chancery Court”) rejected claims of invalidity and unfairness in upholding a...
Chancery Court Grants Pleading Stage Dismissal of Revlon Claims Against Target Company Directors Despite Looming Proxy Contest
Dec. 17, 2020—Robert S. Reder & Victoria D. Selover | 73 Vand. L. Rev. En Banc 249 (2020) | “In Rudd, Vice Chancellor Zurn rejected Plaintiff’s attempted reliance on Tangoe for the proposition that threat of a proxy contest, in and of itself, disabled otherwise independent and disinterested target company directors from making an unconflicted decision to...
Aruba Appraisal: Delaware Supreme Court Rejects Chancery Court’s Exclusive Reliance on Trading Price in Determining “Fair Value” Under DGCL § 262
Oct. 21, 2020—Robert S. Reder & Martin Shepherd | 73 Vand. L. Rev. En Banc 239 (2020) | “Consistent with DFC and Dell, Aruba II reaffirmed the important, if not dispositive, role that deal price usually plays in determining ‘fair value’ for purposes of DGCL § 262. One cannot ignore the fact that the Chancery Court retains broad...
Chancery Court––for the First Time–– Releases Buyer from Obligation to Close due to Target MAE
Oct. 21, 2020—Robert S. Reder & Katie Clemmons | 73 Vand. L. Rev. En Banc 227 (2020) | “Under the standard adopted by the Delaware Court of Chancery (‘Chancery Court’) in In re IBP Inc. Shareholders Litig., 789 A.2d 14 (Del. Ch. 2001) (‘IBP’), a buyer seeking release from its obligations under an acquisition agreement due to...
Negotiating Against Yourself: Flawed Negotiating Process Leads Chancery Court to Deny M&F-Premised Motion to Dismiss
Sep. 22, 2020—Robert S. Reder & Matthew K. Vallade | 73 Vand. L. Rev. En Banc 213 (2020) | “In Alon USA, a target company minority stockholder challenged a transaction where a stockholder owning ‘48% [of the] equity interest’ in the target purchased the remainder of the outstanding stock via a merger transaction. In sorting out this...
Delaware Supreme Court Approves Federal Forum Selection Provision for Securities Act Claims
May. 7, 2020—Robert S. Reder | 73 Vand. L. Rev. En Banc 123 (2020) | “In 2018, the Delaware Court of Chancery (“Chancery Court”) confronted the question of whether a corporation could validly adopt an exclusive forum selection provision requiring that claims under the Securities Act of 1933 (“Securities Act”) be brought in federal rather than state...
Chancery Court Dismisses Breach of Fiduciary Duty Claims Against Target Company Directors Despite Unavailability of Corwin Defense
May. 4, 2020—Robert S. Reder & Lorin Hom | 73 Vand. L. Rev. En Banc 111 (2020) | “In Morrison III, Vice Chancellor Glasscock again dismissed the claims of fiduciary breach brought against all but one of the named target company directors, citing failure by plaintiff to adequately plead facts satisfying the high bar imposed by an...
Chancery Court Denies Rescission of Merger Agreement Where “Indispensable” Company Stockholders Not Named as Parties to Litigation
Apr. 21, 2020—Robert S. Reder & Jacob R. Haskins | 73 Vand. L. Rev. En Banc 105 (2020) | It is customary, when a private corporation with numerous stockholders is sold, for a representative to be appointed to act on behalf of the stockholders if a dispute arises post-closing with respect to a purchase price adjustment or...
Norcraft Appraisal: Chancery Court Gives No Weight to Deal Price Negotiated in a Conflicted CEO-Led Transaction with a Flawed Sales Process
Apr. 21, 2020—Robert S. Reder & Szymon S. Barnas | 73 Vand. L. Rev. En Banc. 93 (2020) | “[I]n Blueblade Capital Opportunities LLC v. Norcraft Companies, Inc., No. CV 11184-VCS, 2018 WL 3602940 (Del. Ch. July 27, 2018) (hereinafter “Norcraft Appraisal Action”), the Chancery Court determined that neither the deal price produced by the sales process...