Previously this blog has discussed the importance of procedural compliance with various transaction structures when the transaction involves controlling or interested parties (see an example here). For instance, in Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”), the Delaware Supreme Court held that compliance with certain process elements enables deferential business judgment review of decisions regarding interested transactions with controlling parties (see here for a helpful discussion about MFW protections). Delaware courts have since expanded the role of MFW-like process protections in various contexts, thus demonstrating that adequate decisionmaking procedures are a central prerequisite to business judgment deference when controllers or interested parties are involved in contemplated transactions.
Limited liability companies, as “alternative entities” under Delaware law, enjoy significantly greater freedom in ordering their internal affairs than do corporations. The contractarian bent of Delaware law is at its height in both the legislative and the judicial treatment of LLCs. Unlike corporations, LLCs may contract out of fiduciary duties on the part of their managers, and may control the nature and availability of remedies for breach of an LLC agreement.
The Annual Survey Working Group of the M&A Jurisprudence Subcommittee, Mergers and Acquisitions Committee, of the ABA Business Law Section reports annually on judicial decisions of significance to mergers and acquisitions (“M&A”) practitioners. The topics covered in the 2023 survey include contractual interpretation, fiduciary duties, and statutory constructs.
The path to a mootness fee is well-worn. A stockholder plaintiff sues alleging that a company’s disclosures or other decisions were inadequate or improper. The company responds by issuing disclosures or taking actions that moot the plaintiff’s claims. This, laudably, avoids the expense and distraction of litigation.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Charlotte K. Newellhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngCharlotte K. Newell2023-08-30 09:31:392023-09-08 09:52:59Magellan Health: A New North Star for Mootness Fee Disputes May Reduce Payments to Plaintiff’s Counsel
In a recent decision, Vice Chancellor Will refused to award expectation damages based on a buyer’s “speculative” synergistic cash flow resulting from a merger. The opinion demonstrates the rigorous approach that the Delaware Court of Chancery takes to calculating damages related to M&A transactions even with strong evidence of fraud, and offers valuable insight to companies calculating damages from lost synergies in M&A transactions.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robert S. Velevishttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobert S. Velevis2023-08-24 14:34:192023-09-08 09:53:44The Line Between Speculation and Expectation in Damages: Delaware Court of Chancery Weighs in on Damages for Fraud in M&A Transaction
Three Sidley partners come together to discuss various issues surrounding a decision to release earnings earlier than scheduled, including the legal, investor relations, and practical considerations that should be considered in making such a decision.
Special Committees Require Special Attention: Lessons from GoDaddy
Previously this blog has discussed the importance of procedural compliance with various transaction structures when the transaction involves controlling or interested parties (see an example here). For instance, in Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”), the Delaware Supreme Court held that compliance with certain process elements enables deferential business judgment review of decisions regarding interested transactions with controlling parties (see here for a helpful discussion about MFW protections). Delaware courts have since expanded the role of MFW-like process protections in various contexts, thus demonstrating that adequate decisionmaking procedures are a central prerequisite to business judgment deference when controllers or interested parties are involved in contemplated transactions.
(more…)
James Heyworth
New York
jheyworth@sidley.com
Vincent J. Margiotta
New York
vmargiotta@sidley.com
For Delaware LLCs, Contractual Freedom Overrides Equitable Defenses
Limited liability companies, as “alternative entities” under Delaware law, enjoy significantly greater freedom in ordering their internal affairs than do corporations. The contractarian bent of Delaware law is at its height in both the legislative and the judicial treatment of LLCs. Unlike corporations, LLCs may contract out of fiduciary duties on the part of their managers, and may control the nature and availability of remedies for breach of an LLC agreement.
(more…)
Robin E. Wechkin
Seattle
rwechkin@sidley.com
Five Essential D&O Insurance Questions
Recent cases highlight the increased risk of personal liability for directors. Is your company doing enough to protect the board?
John M. Skakun III
Chicago
jskakun@sidley.com
Annual Survey of Judicial Developments Pertaining to Mergers and Acquisitions
The Annual Survey Working Group of the M&A Jurisprudence Subcommittee, Mergers and Acquisitions Committee, of the ABA Business Law Section reports annually on judicial decisions of significance to mergers and acquisitions (“M&A”) practitioners. The topics covered in the 2023 survey include contractual interpretation, fiduciary duties, and statutory constructs.
(more…)
Enhanced Scrutiny Contributors
delawarelit@sidley.com
Magellan Health: A New North Star for Mootness Fee Disputes May Reduce Payments to Plaintiff’s Counsel
The path to a mootness fee is well-worn. A stockholder plaintiff sues alleging that a company’s disclosures or other decisions were inadequate or improper. The company responds by issuing disclosures or taking actions that moot the plaintiff’s claims. This, laudably, avoids the expense and distraction of litigation.
(more…)
Charlotte K. Newell
New York
cnewell@sidley.com
The Line Between Speculation and Expectation in Damages: Delaware Court of Chancery Weighs in on Damages for Fraud in M&A Transaction
In a recent decision, Vice Chancellor Will refused to award expectation damages based on a buyer’s “speculative” synergistic cash flow resulting from a merger. The opinion demonstrates the rigorous approach that the Delaware Court of Chancery takes to calculating damages related to M&A transactions even with strong evidence of fraud, and offers valuable insight to companies calculating damages from lost synergies in M&A transactions.
(more…)
Robert S. Velevis
Dallas
rvelevis@sidley.com
Phillip Shaverdian
Dallas
pshaverdian@sidley.com
Timely Takes Podcast: Earnings Pre-Releases
Three Sidley partners come together to discuss various issues surrounding a decision to release earnings earlier than scheduled, including the legal, investor relations, and practical considerations that should be considered in making such a decision.
(more…)
Beth E. Berg
Chicago
bberg@sidley.com
Paul L. Choi
Chicago
pchoi@sidley.com
Jim Ducayet
Chicago
jducayet@sidley.com
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