Controlling Stockholders

News & Analysis as of

Business-Judgment Rule Applied in New York to Going-Private Transaction with Procedural Protections

The New York Appellate Division, First Department, ruled Thursday that the business-judgment rule – not the entire-fairness standard of review – can apply to a going-private transaction with the majority shareholder where the...more

Delaware Court of Chancery Applies Business Judgment Rule to Directors Who Approve Merger Supported by Large Shareholders

In its October 24, 2014, decision in In re Crimson Exploration Inc. Stockholder Litigation, C.A. No. 8541, the Delaware Court of Chancery confirmed that the business judgment rule is applicable in evaluating claims for breach...more

Delaware Court of Chancery Rejects Entire Fairness Review in Absence of Conflicted Transaction

On October 24, the Delaware Court of Chancery dismissed a lawsuit filed by certain minority stockholders of Crimson Exploration, Inc. in In re: Crimson Exploration Inc. Stockholder Litigation, C.A. No. 8541-VCP (Del. Ch. Oct...more

Delaware Court of Chancery Provides Guidance on Controlling Stockholder Issues

In a new decision, In re Crimson Exploration Inc. Stockholder Litigation, Vice Chancellor Donald Parsons of the Delaware Court of Chancery provides guidance on when, particularly in the deal context, a significant but...more

In re KKR Financial Holdings LLC S'holder Litig., Consol. C.A. No. 9210-CB (Del. Ch. Oct. 14, 2014) (Bouchard, C.)

In this opinion, the Court of Chancery dismissed a purported class action by stockholders of KKR Financial Holdings LLC (“KFN”) challenging its acquisition by KKR & Co. L.P. (“KKR”) in a stock-for-stock merger, rejecting...more

Business Judgment Rule Protects Board's Decision to Maximize the Value of an Insolvent Delaware Corporation Even If It Puts...

Directors of an insolvent corporation face a host of difficult questions. Should they wind up operations or file for bankruptcy to preserve assets for creditors, or chart a riskier course that could lead the company back to...more

M&A Update: No Control, No Conflict, No Problem

On October 24th, the Delaware Chancery Court dismissed a lawsuit challenging the merger of Crimson Exploration and Contango Oil & Gas. Minority Crimson stockholders alleged that Oaktree Capital Management, Crimson’s largest...more

Delaware Court Dismisses Action Against Seller's Directors and Financial Advisor, And Finds That Large Stockholder's "Side Deals"...

On October 24, 2014, the Delaware Court of Chancery issued a decision, In Re: Crimson Exploration Inc. Stockholder Litigation, addressing when: (i) a stockholder with less than majority voting power may be deemed a...more

Delaware Court of Chancery Rejects Controlling Stockholder Claims and Applies Business Judgment Rule to Merger Suits

In In re KKR Financial Holdings LLC Shareholder Litigation, C.A. No. 9210 (Del. Ch. Oct. 14, 2014), the Delaware Court of Chancery dismissed a shareholder derivative suit brought by shareholders of KKR Financial Holdings LLC...more

Delaware Chancery Court Applies M&F Worldwide Six-Factor Test in Private Company Freeze-Out Merger and Grants Motion to Dismiss...

In a bench ruling in Swomley v. Schlecht, C.A. No. 9355-VCL (Del. Ch. Aug. 27, 2014), the Delaware Chancery Court relied on the six-factor test set out in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), to dismiss a...more

Delaware Court Denies Dismissal for Disinterested Directors When Entire Fairness Applies

The Delaware Court of Chancery recently addressed the pleading standard for claims against disinterested directors arising out of transactions involving a controlling stockholder, where the transaction has been alleged to be...more

Breaking: Chancery Court Issues Decision on Claims Against Independent Directors in Controlling Stockholder Transactions

Delaware decisional law on entire fairness review of controlling shareholder transactions has been complicated in part by the subtle distinction between facially disinterested directors (who are liable only where a specific,...more

Delaware Court Denies Attorneys’ Fees for Stockholders in Appraisal Proceedings

The Delaware Court of Chancery recently held that certain stockholders who launched appraisal proceedings challenging a merger lacked standing to obtain reimbursement of attorneys’ fees from a $10.7 million settlement in a...more

Delaware Court of Chancery Rules That a Major Debt Holder and 48 Percent Stockholder Is a Controlling Stockholder and Owes...

In Hamilton Partners, L.P. v. Highland Capital Management, L.P., the Delaware Court of Chancery denied a motion to dismiss breach of fiduciary duty claims brought by former stockholders of American Home Patient, Inc. (AHP)...more

Delaware Court of Chancery Applies Entire Fairness Standard to Going-Private Transaction with a Controlling Stockholder Negotiated...

In In re Orchard Enterprises, Inc. Stockholder Litigation, the Delaware Court of Chancery held that the entire fairness standard of review applied to a going-private transaction with a controlling stockholder, even though the...more

Corporate and Financial Weekly Digest - Volume IX, Issue 25

In this issue: - Delaware Court of Chancery Rules That a Major Debt Holder and 48 Percent Stockholder Is a Controlling Stockholder and Owes Fiduciary Duties to Minority Stockholders - Delaware Court of Chancery...more

New UK Financial Conduct Authority Delisting Requirements

Changes to FCA Listing Rules increase requirements for delisting a premium listed company with a controlling shareholder. On 1 May 2014, the UK’s Financial Conduct Authority (FCA) announced changes to Listing Rule 5,...more

"FCA Listing Rule Changes Applicable to Premium Listed Companies"

On 2 October 2012, the Financial Conduct Authority (FCA) published a wide-ranging consultation paper (CP12/25) on the effectiveness of the listing regime which proposed a number of changes to the Listing Rules, including in...more

M&A Update: Ohio Federal Judge Blocks Controlling Stockholder’s Tender Offer Based On Target Board’s Conflicts and Stockholder...

In a March 14, 2014 decision that has received little commentary, an Ohio federal court in Spachman v. Great American Insurance Co. took the extraordinary step of enjoining a tender offer by Great American Insurance, a...more

"Proposed Amendments to the Delaware General Corporation Law"

On April 17, 2014, the Corporation Law Section of the Delaware State Bar Association proposed legislation that, if adopted, would amend the Delaware General Corporation Law (the DGCL) in a number of important ways. Proposed...more

Mergers & Acquisitions Alert: Controlling Stockholder Squeeze-Outs May Be Structured to Achieve Deferential “Business Judgment...

In Kahn v. M&F Worldwide Corp. (Del. Mar. 14, 2014), the Delaware Supreme Court recently decided that a going private transaction sponsored by the controlling stockholder of a Delaware corporation may, under certain...more

Delaware Supreme Court Tells Controlling Shareholders “If You Look Out For Your Minority, We’ll Look Out For You”

On March 14, 2014, the Delaware Supreme Court unanimously affirmed an important Delaware Court of Chancery decision issued in 2013 that offered a roadmap to companies and their directors on how to obtain the protections of...more

Update: Landmark Decision By Delaware's High Court Affirms Deferential Business Judgment Review For Controlling Stockholder...

Last summer, in our post titled Protecting Your Business Judgment: Recent Developments in Delaware Law on M&A Deals Involving Controlling Stockholders, we alerted you that two trial courts in the nation’s leading forum for...more

Securities Update - March 2014

In December 2013, the Staff of the Securities and Exchange Commission’s Division of Corporation Finance issued to Congress its “Report on Review of Disclosure Requirements in Regulation S-K” (the S-K Study) that originally...more

Delaware Supreme Court Affirms Criteria for Applying the Business Judgment Rule to Controlling Stockholder Going-Private...

In Kahn, et al. v. M & F Worldwide Corp., et al., 2014 WL 996270 (Del. Mar. 14, 2014), the Delaware Supreme Court unanimously affirmed that, when certain procedural safeguards are implemented at the outset of negotiations, a...more

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