Last year we explained how a word as common as the conjunction “and” could be subject to different interpretations in a contract. See Grammarian’s Delight: It Depends On What The Meaning Of ‘And’ Is. The Delaware Supreme Court recently affirmed Vice-Chancellor Glasscock’s construction of the word “and” given the “range of possible interpretations” that courts have endorsed for the word—a good reminder for parties to exercise care when drafting agreements.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Ian M. Rosshttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngIan M. Ross2023-04-19 15:07:302023-09-08 10:22:31Delaware Supreme Court Confirms That “and” Is a Word of Many Meanings
Sidley is pleased to share the March 2023 issue ofSidley Perspectives on M&A and Corporate Governance, a quarterly newsletter designed to keep you current on what we consider to be the most important legal developments involving M&A and corporate governance matters.
In a recent post-trial opinion in In Re Mindbody, Inc., Stockholder Litigation, Chancellor Kathaleen McCormick of the Delaware Chancery Court gave new life to the Revlon enhanced scrutiny standard of review when she held that the former CEO of Mindbody, Inc. and its private equity acquiror were liable for orchestrating and failing to fully disclose what the court found to be a sweetheart deal that deprived stockholders of the benefit of a maximized purchase price.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2023/04/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_12.jpg606833Claire H. Hollandhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngClaire H. Holland2023-04-04 11:13:282023-09-08 10:24:05Revlon Revived: Former Executive and Private Equity Acquiror Both Held Liable for Tainted Sale Process That Failed to Maximize Stockholder Benefits
In a March 1, 2023 opinion (In re McDonald’s Corp. Stockholder Derivative Litig., C.A. No. 2021-0324-JTL), the Delaware Court of Chancery dismissed duty of oversight claims against director defendants and provided helpful guidance on “mission critical” risks, the “gross negligence” standard under the business judgment rule, and redactions in productions of books and records under DGCL Section 220, including the potential that a motion to dismiss relying on overly redacted documents from a 220 production could be converted to a motion for summary judgment by the court. The court also entered an order on the same day, granting the defendants’ Rule 23.1 motion and dismissing the action in its entirety, including claims against the company’s former Global Chief People Officer. The court had previously denied a motion to dismiss those claims under Rule 12(b)(6) on January 25, 2023, as discussed further here, underscoring the important role of Rule 23.1 in derivative cases.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Nilofer Umarhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngNilofer Umar2023-03-20 09:06:482023-09-08 10:24:44Court of Chancery Dismisses Director Oversight Claims Related to Mission Critical Risk
Many private equity partnerships utilize a limited partner advisory committee (“LPAC”) as a mechanism to approve certain transactions, particularly those where a potential conflict of interest could exist. While Delaware corporate law provides well defined rules for how a self-interested transaction can be cleansed by disinterested directors or shareholders in the context of a corporation, the rules are less well defined when it comes to conflicts of interest for partnerships including private equity funds established as limited partnerships. The decision from In re SunEdison, Inc. demonstrates that the LPAC’s role in approving conflicted transactions remains a case-by-case, contract specific analysis.
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. Velevis2023-03-15 09:26:152023-09-08 10:25:37The LPAC Strikes Back . . . When The Contract Says It Can
On February 21, 2023, Vice Chancellor Will of the Delaware Court of Chancery issued an opinion in the In re Lordstown Motors Corp. case explaining the court’s grant of Lordstown Motor Corporation’s (Lordstown) petition under 8 Del. C. § 205 validating an amendment to the Lordstown certificate of incorporation that increased the corporation’s authorized share count as well as the shares issued pursuant to that amended certificate of incorporation. In six sequential hearings the day before the opinion was issued, the court granted from the bench the Lordstown petition and petitions filed by five other companies that had merged with special purpose acquisition companies (SPACs) using a transaction structure for so-called “de-SPAC mergers” (through which the SPAC acquires a target) that has been widely used over the past few years.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/11/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_26.jpg606833Jim Ducayethttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJim Ducayet2023-03-02 10:16:492023-09-08 10:26:30Court of Chancery Validates Putative Shares Issued in and After de-SPAC Mergers
The recent Court of Chancery decision in Delman v. GigAcquisitions3 offers some interesting insights into the circumstances in which “entire fairness” review applies, and where “Corwin cleansing” can be used to achieve a lesser review standard.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jon Muenzhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJon Muenz2023-02-21 09:08:312023-09-08 10:27:20SPAC in Action: Court of Chancery Applies Entire Fairness Review in Declining to Dismiss SPAC Lawsuit
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Delaware Supreme Court Confirms That “and” Is a Word of Many Meanings
Last year we explained how a word as common as the conjunction “and” could be subject to different interpretations in a contract. See Grammarian’s Delight: It Depends On What The Meaning Of ‘And’ Is. The Delaware Supreme Court recently affirmed Vice-Chancellor Glasscock’s construction of the word “and” given the “range of possible interpretations” that courts have endorsed for the word—a good reminder for parties to exercise care when drafting agreements.
(more…)
Ian M. Ross
Miami
iross@sidley.com
Nicole K. Chipi
Miami
nchipi@sidley.com
Sidley Perspectives on M&A and Corporate Governance: 2023 Year-in-Review
Sidley is pleased to share the March 2023 issue of Sidley Perspectives on M&A and Corporate Governance, a quarterly newsletter designed to keep you current on what we consider to be the most important legal developments involving M&A and corporate governance matters.
Enhanced Scrutiny Contributors
delawarelit@sidley.com
Revlon Revived: Former Executive and Private Equity Acquiror Both Held Liable for Tainted Sale Process That Failed to Maximize Stockholder Benefits
In a recent post-trial opinion in In Re Mindbody, Inc., Stockholder Litigation, Chancellor Kathaleen McCormick of the Delaware Chancery Court gave new life to the Revlon enhanced scrutiny standard of review when she held that the former CEO of Mindbody, Inc. and its private equity acquiror were liable for orchestrating and failing to fully disclose what the court found to be a sweetheart deal that deprived stockholders of the benefit of a maximized purchase price.
(more…)
Claire H. Holland
Chicago
cholland@sidley.com
Heather Benzmiller Sultanian
Chicago
hsultanian@sidley.com
Court of Chancery Dismisses Director Oversight Claims Related to Mission Critical Risk
In a March 1, 2023 opinion (In re McDonald’s Corp. Stockholder Derivative Litig., C.A. No. 2021-0324-JTL), the Delaware Court of Chancery dismissed duty of oversight claims against director defendants and provided helpful guidance on “mission critical” risks, the “gross negligence” standard under the business judgment rule, and redactions in productions of books and records under DGCL Section 220, including the potential that a motion to dismiss relying on overly redacted documents from a 220 production could be converted to a motion for summary judgment by the court. The court also entered an order on the same day, granting the defendants’ Rule 23.1 motion and dismissing the action in its entirety, including claims against the company’s former Global Chief People Officer. The court had previously denied a motion to dismiss those claims under Rule 12(b)(6) on January 25, 2023, as discussed further here, underscoring the important role of Rule 23.1 in derivative cases.
(more…)
Nilofer Umar
Chicago
numar@sidley.com
Jarrett H. Gross
Chicago
jarrett.gross@sidley.com
Sudeep S. Dhanoa
Chicago
sdhanoa@sidley.com
The LPAC Strikes Back . . . When The Contract Says It Can
Many private equity partnerships utilize a limited partner advisory committee (“LPAC”) as a mechanism to approve certain transactions, particularly those where a potential conflict of interest could exist. While Delaware corporate law provides well defined rules for how a self-interested transaction can be cleansed by disinterested directors or shareholders in the context of a corporation, the rules are less well defined when it comes to conflicts of interest for partnerships including private equity funds established as limited partnerships. The decision from In re SunEdison, Inc. demonstrates that the LPAC’s role in approving conflicted transactions remains a case-by-case, contract specific analysis.
(more…)
Robert S. Velevis
Dallas
rvelevis@sidley.com
Nick Greenberg
Dallas
ngreenberg@sidley.com
Court of Chancery Validates Putative Shares Issued in and After de-SPAC Mergers
On February 21, 2023, Vice Chancellor Will of the Delaware Court of Chancery issued an opinion in the In re Lordstown Motors Corp. case explaining the court’s grant of Lordstown Motor Corporation’s (Lordstown) petition under 8 Del. C. § 205 validating an amendment to the Lordstown certificate of incorporation that increased the corporation’s authorized share count as well as the shares issued pursuant to that amended certificate of incorporation. In six sequential hearings the day before the opinion was issued, the court granted from the bench the Lordstown petition and petitions filed by five other companies that had merged with special purpose acquisition companies (SPACs) using a transaction structure for so-called “de-SPAC mergers” (through which the SPAC acquires a target) that has been widely used over the past few years.
(more…)
Jim Ducayet
Chicago
jducayet@sidley.com
Jarrett H. Gross
Chicago
jarrett.gross@sidley.com
SPAC in Action: Court of Chancery Applies Entire Fairness Review in Declining to Dismiss SPAC Lawsuit
The recent Court of Chancery decision in Delman v. GigAcquisitions3 offers some interesting insights into the circumstances in which “entire fairness” review applies, and where “Corwin cleansing” can be used to achieve a lesser review standard.
(more…)
Jon Muenz
New York
jmuenz@sidley.com
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Alex J. Kaplan
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Ian M. Ross
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Hille R. Sheppard
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Heather Benzmiller Sultanian
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Robert S. Velevis
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Robin E. Wechkin
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