Litigation developments: core M&A and corporate governance doctrines
Compliance Perspectives: Due Diligence and Ultimate Beneficial Ownership (UBO)
On March 25, Delaware governor, Matt Meyer, signed into law Substitute 1 to Senate Bill 21 (SB 21), following its rapid approval by the Delaware state legislature. This legislative measure aims to counter the current trend of...more
On March 3, a committee of the Delaware State Bar Association (DSBA) announced revisions to Senate Bill 21 (SB 21) aimed at paring back some of the proposed protections seen as too controller-friendly....more
Controlling stockholders owe fiduciary duties to other stockholders that minority stockholders do not. A holder of over 50% of a corporation’s voting power is clearly a controlling stockholder. As a consequence, transactions...more
The Background: After unsuccessfully trying to convince the special committee not to implement a plan to liquidate a business line, which the controlling stockholder believed would destroy value, the controlling stockholder...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
In a landmark decision, In re Sears Hometown & Outlet Stores, Inc. Stockholder Litigation,1 the Delaware Court of Chancery held that a controlling stockholder did not breach his fiduciary duties when he amended company bylaws...more
A Win for Deal Certainty, Delaware Court of Chancery Orders Closing of Cake Supplier Acquisition; Under Armour to Pay $9M to Settle SEC Charges Involving Disclosure Failures; First Circuit Upholds Decision Applying Federal...more
IN RE DELL TECHNOLOGIES INC. CLASS V STOCKHOLDERS LITIGATION There has been a growing deference in Delaware courts for transactions approved by independent special committees and minority stockholders. In the context of a...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 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
In re Pilgrim’s Pride Corp. Derivative Litigation, Consol. C.A. No. 2018-0058-JTL (Del. Ch. Mar. 15, 2019). Stockholders that control Delaware corporations find themselves subject to fiduciary duties. According to this...more
In the private company world, the buck stops with the majority owners, who generally hold the reins to running the business. In our experience, however, it is not uncommon for some majority owners to push the limits of their...more
In the recent decision of Flood v. Synutra International, Inc., a divided Delaware Supreme Court affirmed the Court of Chancery’s dismissal of a challenge to a controlling stockholder’s take-private transaction. The Court in...more
On March 28, 2018, in In re Tesla Motors, Inc. Stockholder Litigation, the Delaware Court of Chancery denied a motion to dismiss a lawsuit brought by stockholders of Tesla Motors, Inc. (“Tesla” or the “Company”)....more
In re Tesla Motors Inc. Stockholder Litigation, C.A. No. 12711-VCS (Del. Ch. Mar. 28, 2018) - Under Delaware law, a controlling stockholder need not be a majority stockholder. Rather, a controlling stockholder might be a...more
Chelsea Therapeutics: Post-Closing Bad Faith Claim a ‘Rare Bird’ in Delaware Absent Allegations of Self-Interestedness or Lack of Independence - In In re Chelsea Therapeutics International LTD Stockholders Litigation,...more
This is another in a series of decisions dealing with the allegation that a minority stockholder controlled a deal through its control of a majority of the board of directors....more
The North Carolina Business Court recently issued an opinion considering whether a minority shareholder can ever be considered a “controlling shareholder” who owes a fiduciary duty to other shareholders. The court’s opinion...more
In one of the largest ever M&A-related recoveries for shareholders, Vice Chancellor J. Travis Laster ordered Dole Food Company, Inc.’s Chairman and CEO, David Murdock, and Dole’s former President, COO and General Counsel, C....more
In just the past three months, the Delaware Court of Chancery has issued four opinions (In re KKR Financial Holdings LLC Shareholder Litigation, Consol. C.A. No. 9210-CB; In re Crimson Exploration Stockholder Litigation, C.A....more
Emphasizing the demanding pleading standards a shareholder must meet to show that a minority shareholder controls a board of directors, on November 25, Vice Chancellor Glasscock dismissed claims for breach of fiduciary duties...more
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
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
In Kahn v. M&F Worldwide Corp, the Delaware Supreme Court unanimously affirmed the Court of Chancery's 2013 decision that a going-private merger with a controlling stockholder may be subject to the deferential business...more
On May 29, 2013, the landmark decision of In re MFW Shareholders Litigation (MFW), issued by Chancellor Strine of the Delaware Chancery Court, held the business judgment rule standard of review is applicable to freeze-out...more