Tag: Fiduciary Duties
Keeping Up With M&A Case Law – Spotlight on Recent Delaware Decisions
The mergers & acquisitions market may wax and wane, but one thing in M&A is consistent from year to year: The Delaware courts issue opinions that impact M&A dealmaking. And this year is certainly no exception – Delaware courts continue to have plenty to say about M&A. While certainly not […]
Delaware Advance Notice Decisions Highlight Move Toward Enhanced Scrutiny of Board Actions, Even Where Conflicts Exist
Like US constitutional law, Delaware courts apply a tiered standard of judicial review to actions taken by the board of directors of corporations: Business judgment deference (rational basis). Enhanced scrutiny under Unocal and Revlon (intermediate scrutiny). The compelling justification standard articulated in Blasius (strict scrutiny). In the constitutional arena, the […]
Pleading Bad Faith Against Special Committee Members: A New Trend?
Special committees, by design, are created to address conflicts and to insulate the board of directors from liability for the very conflicts that may invite judicial scrutiny of the fairness of the board’s decision. A well-functioning special committee will also mitigate the risk of personal liability for a company’s fiduciaries, […]
Long-Term Focus: Preparing for Activism + Takeovers Amid COVID-19 Risks
Last week we cautioned that market volatility resulting from the COVID-19 pandemic could lead to increasing levels of shareholder activism and unsolicited takeover offers. Although the pandemic has raised countless new risks, companies remain vulnerable to activism attacks that focus on short-term objectives and opportunistic takeover bids stemming from the […]
No Harm, but Foul: Process Considerations for “Interested” Transactions
After over seven years of litigation, the Delaware Supreme Court on December 11, 2015 upheld the Court of Chancery’s important decision in Nine Systems, which held that a 2002 recapitalization of a streaming media start-up unfairly diluted the minority stockholders when VC-backed directors failed to include the stockholders in an emergency round of financing […]
Court Upholds Banker Liability for Inducing Faulty Process in Rural/Metro Sale
On November 30, 2015, in RBC Capital Markets, LLC v. Jervis (C.A. No. 6350-VCL) the Delaware Supreme Court upheld the principal rulings finding financial advisor RBC Capital Markets, LLC liable for approximately $76 million in damages for aiding and abetting breaches of fiduciary duties by former directors of Rural/Metro Corporation in connection […]
What Revlon Doesn’t Require
Two decisions by the Delaware courts (In re Family Dollar Stores, Inc. and C&J Energy Services Inc. v. City of Miami General Employees’ and Sanitation Employees’ Retirement Trust have more precisely defined the contours—substantive and procedural—of exactly what is (and what is not) required by a board of directors in complying with “Revlon” duties related to the sale of a controlling stake in a Delaware corporation.
A Reminder on Adequate Process
The Delaware Chancery Court analyzes a dilutive recapitalization transaction under the entire fairness standard of review and finds flawed process, despite a fair price in the deal.