Litigation developments: core M&A and corporate governance doctrines
Compliance Perspectives: Due Diligence and Ultimate Beneficial Ownership (UBO)
Kormos v. Playtika Hldg. UK II Ltd., C.A. 2023-0396-SG (Del. Ch. May 3, 2024) - In this decision involving breach of fiduciary duty claims against two officers, the Court granted the individual defendants’ motions to...more
In In re Match Group Deriv. Litig., the Delaware Supreme Court affirmed in part and reversed in part the lower court’s decision on the appropriate standard of review and the application of Kahn v. M & F Worldwide Corp., 88...more
On April 4, 2024, the Delaware Supreme Court issued a much-anticipated decision, In re Match Group Derivative Litigation (“In re Match Group”), extending the MFW doctrine more broadly to all conflicted controller...more
In a recent decision, the Delaware Supreme Court clarified the proper standard to apply to a non-freeze-out merger transaction involving a controlling stockholder. Litigators who practice in the Delaware Court of Chancery are...more
The Delaware Court of Chancery, in Palkon v. Maffei, et al., C.A. No. 2023-0449-JTL (Del. Ch. Feb. 20, 2024), determined that a reduction in the liability exposure of a fiduciary due to the conversion of a Delaware...more
On January 30, 2024, the Chancellor of the Delaware Court of Chancery struck down the $55.8 billion compensation plan that Tesla, Inc.’s board of directors had granted to Tesla’s well-known CEO, Elon Musk, finding that the...more
Triggering Delaware’s entire fairness review in stockholder litigation was once considered outcome determinate, but that view has waned. Numerous decisions have shown that defendants can overcome the unified fair process and...more
Delman v. GigAcquisitions3 LLC, C.A. No. 2021-0679-LWW (Del. Ch. January 4, 2023) - Delaware law establishes that fiduciaries of a corporation cannot be exempted from "their loyalty obligation and the attendant equitable...more
The Delaware Court of Chancery issued its decision in In re Tesla Motors, Inc., on April 27, 2022, rejecting claims that Tesla, Inc. CEO Elon Musk breached his fiduciary duties to Tesla’s stockholders as a director and an...more
The decision adopts enhanced scrutiny of director fiduciary duties for de-SPAC transactions, but suggests dismissal may be appropriate when stockholders exercise redemption rights on a fully informed basis. On January 3,...more
The recently filed complaint in Franchi v. Multiplan Corp., et al. is one to watch because it alleges breach of fiduciary duties by the directors and controlling shareholders of Churchill Capital Corp. III (Company), a...more
In re Pattern Energy Grp. Inc. Stockholders Litig., C.A. No. 2020-0357-MTZ (Del. Ch. May 6, 2021) - This decision mostly denying a motion to dismiss examines several important issues in post-closing M&A fiduciary duty...more
In 2014, the Delaware Supreme Court’s landmark Kahn v. M&F Worldwide Corp.1 (MFW) decision established that the deferential business judgment standard of review could apply to controlling stockholder “squeeze-out” mergers...more
In re HomeFed Corporation Stockholder Litigation, C.A. 2019-0592-AGB (Del. Ch. July 13, 2020) - This case illustrates that the Court of Chancery will apply the entire fairness standard to review a squeeze-out merger by a...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
This issue focuses on important, developing areas of Delaware corporation law and deal litigation, including recent trends in Delaware corporate disclosure law, the Delaware Supreme Court’s important ruling in Marchand v....more
Corporate Governance and Securities Law Developments - Directors Can Be Held Liable for Failure to Oversee “Mission Critical” Regulatory Compliance - On October 1, the Delaware Court of Chancery refused to dismiss a...more
The Delaware Chancery Court rejected an attempt by Tesla’s Board of Directors to dismiss a challenge to CEO Elon Musk’s “extraordinary” 2018 compensation package. Because Musk is also Tesla’s controlling stockholder, the...more
Tornetta v. Musk, C.A. No. 2018-0408-JRS (Del. Ch. Sept. 20, 2019). Under Delaware law, executive compensation decisions by a corporation’s board of directors generally are entitled to deferential judicial review, and even...more
An “allegation that a transaction involves a controlling stockholder who stands on both sides is a serious one because it imposes fiduciary duties on the controlling stockholder and potentially strips directors of the...more
In the latest Delaware decision to expound MFW and the structuring of controller transactions, the Delaware Supreme Court clarified the requirement for a controlling stockholder to condition its offer “up front” on MFW’s dual...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
The Delaware Supreme Court’s seminal decision in Kahn v. M&F Worldwide Corporation (MFW) offers a pathway for having challenges to controlling stockholder “squeeze-out” mergers reviewed under the highly deferential business...more
Flood v. Synutra Int’l, Inc., C.A. No. 101, 2018 (Del. Oct. 9, 2018) - Under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), commonly referred to as MFW, a controller may gain the benefit of business judgment review...more