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Law School Toolbox Podcast Episode 384: Listen and Learn -- The Business Judgment Rule (Corporations)
Bar Exam Toolbox Podcast Episode 184: Listen and Learn -- The Business Judgment Rule (Corporations)
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When a court reviews contested business transactions of a Delaware corporation, they typically rely on one of two standards of review: the “business judgment rule” or the “entire fairness standard.” The business judgment rule...more
A recent decision by the Delaware Supreme Court emphasizes the importance of fully disclosing material director and officer conflicts of interest in connection with proposed M&A transactions. Indeed, as the Court’s ruling...more
In a legal challenge to a corporate transaction, the applicable standard of review is often outcome determinative. The deferential business judgment rule applies where the board is not majority conflicted. The burden is on...more
On February 27, the Delaware Court of Chancery issued important guidance to boards of directors seeking to utilize special committees of disinterested and independent directors to insulate themselves from fiduciary liability...more
The Background: A shareholder challenged an extraordinary and extremely lucrative incentive-based compensation package awarded by Tesla to its chair, CEO, and controlling shareholder, claiming a breach of fiduciary duties. ...more
On October 11, 2019, Vice Chancellor Kathaleen S. McCormick of the Delaware Court of Chancery dismissed all but one claim arising out of an asset sale by Pro Performance Sports, LLC (“Pro Performance”) to private equity firm...more
The following is an update to an important Delaware case relating to the applicable standard of review for challenged actions involving the setting of director compensation. ...more
Olenik v. Lodzinksi, No. 392, 2018 (Del. Apr. 5, 2019). Under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), deferential business judgment review governs mergers between a controlling stockholder and the controlled...more
In a decision with potentially far-reaching implications for private equity sponsors and other controlling stockholders, the Delaware Court of Chancery expanded the potential for liability for foreign-based controllers by...more
Most directors and officers are aware of Section 144 of the Delaware General Corporation Law, which provides that a corporate transaction involving an interested director or officer is not void solely because of that reason,...more
On December 13, 2017, the Delaware Supreme Court issued an opinion, In re Investors Bancorp, Inc. Stockholder Litigation, Case No. 169, holding that, except under limited circumstances, the court will not apply the...more
IRA Trust FBO Bobbie Ahmed v. Crane, C.A.. 12742-CB (December 11, 2017) - This is an important decision because it extends the holding of MFW to a stock reclassification. Under the 6-part test of MFW, the business judgment...more
This is an important decision if only because it explains a further limitation on the Corwin rule that an informed uncoerced stockholder vote insulates a corporate transaction from attack. First, the decision explains when a...more
What is the most significant recent development in Delaware, from a litigation standpoint? The most significant recent development impacting deal litigation in Delaware is the continuing evolution of the Corwin doctrine,...more
Recent Delaware Supreme Court and Court of Chancery cases have continued to refine the impact and requirements of Corwin v. KKR Financial Holdings LLC, in which the Delaware Supreme Court held that the business judgment rule...more
In a string of recent cases, the Delaware courts have given public companies a roadmap for structuring the decision-making process in merger transactions. Before delving into the recent decisions, it may help to understand...more
As previously reported in Insights: The Delaware Edition, the Delaware Supreme Court’s landmark decision in Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015) articulated a new defendant-friendly rule for...more
On October 10, 2016, the Delaware Court of Chancery issued its decision in In re Books-A-Million, Inc. Stockholders Litigation. The decision, authored by Vice Chancellor J. Travis Laster, is important because it applies the...more
This is an important decision that reverses a prior opinion in the same case. The Court did so because after it issued its prior opinion, the Delaware Supreme Court issued its Corwin decision holding that when a merger is...more
We are pleased to share with you the inaugural issue of Insights: The Delaware Edition, a periodic publication addressing significant Delaware deal litigation and corporation law developments. In This Issue: - Q&A...more
Earlier this year, in a consolidated breach of fiduciary duty and appraisal action, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued a post-trial opinion that includes many important takeaways for...more
The Delaware Supreme Court recently issued an important decision clarifying the standards that govern claims for money damages against independent directors of corporations whose charters contain exculpatory provisions. ...more
Corporate directors routinely make decisions regarding their own compensation. If challenged by stockholders, such decisions are generally reviewed by Delaware courts under the onerous "entire fairness" standard, which...more
During 2013, in addition to the important changes to the Delaware General Corporation Law (“DGCL”) and the Limited Liability Company Act, described here, the Delaware courts issued a number of decisions that have a direct...more