In Re Loral Space and Communications Inc. Consolidated Litigation

Memorandum Opinion for In Re Loral Space and Communications Inc


This decision is a reminder that the Delaware courts do not hesitate to uphold fiduciary duties and impose consequences on directors who do not abide by their obligations.

The Court reformed the terms of a control transaction involving a group that “stood on both sides of the transaction” and breached their fiduciary duties but did not establish the “entire fairness” of the deal that they “pushed through.”

For DGCL Section 102(b)(7) purposes, the Court emphasized that it is not enough that a “non-independent director” voted in favor of a conflicted deal in order for the director to have personal liability imposed. Instead to establish liability for such a director, a plaintiff must overcome the hurdle of Section 102(b)(7) by establishing the

relevant “state of mind” of the director, such that it would be a “non-exculpated” breach of the duty of loyalty.

The special committee created in this case was one in name only and did not satisfy the prerequisites, such as independence, that would entitle such a committee to any


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Reference Info:Decision | State, 3rd Circuit, Delaware | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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