What happens when you buy somebody else’s problems? A new policy from the U.S. Department of Justice (DOJ) is encouraging companies to disclose the misconduct of the companies they buy. The DOJ says it won’t prosecute businesses that voluntarily report wrongdoing found during the mergers and acquisitions process.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/05/MN-23012_Self-Reporting_MA_podcast_640x400.jpg400641Samir A. Gandhihttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngSamir A. Gandhi2024-05-21 09:05:202024-05-21 09:33:54Buyer Beware: What to Know About the DOJ’s Policy on Self-Reporting in M&A
In a recent decision by Vice Chancellor Glasscock of the Delaware Court of Chancery, Handler v. Centerview Partners Holdings, L.P., the Vice Chancellor considered whether a partnership agreement existed based on a purported oral agreement. The Court of Chancery’s decision provides useful guidance to practitioners and reaffirms that, while Delaware law permits oral agreements, including partnership agreements, that agreement must include all material, essential terms – an agreement to agree is insufficient.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Sophia A. Blakehttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngSophia A. Blake2024-05-14 09:02:392024-05-14 09:37:18You May Think You Are a Partner, But… Chancery Opinion Reaffirms That Any Agreement, Written or Oral, Must Include All Material Terms
In a recent case, Palkon v. Maffei (TripAdvisor), the Delaware Supreme Court accepted an interlocutory appeal of the Court of Chancery’s denial of shareholders’ motion to dismiss. Such appeals are not common: Delaware Supreme Court Rule 42(b) expressly provides that “[i]nterlocutory appeals should be exceptional, not routine, because they disrupt the normal procession of litigation, cause delay, and can threaten to exhaust scarce party and judicial resources.” Even more unusually, the Delaware Supreme Court took this step over the Court of Chancery’s refusal to certify the appeal. This decision and others demonstrate the Delaware Supreme Court’s willingness to step in affirmatively, even mid-case, to ensure the coherence and predictability of corporate governance law — particularly when a matter of public concern is at stake. (more…)
In M&A transaction agreements, contracting parties frequently negotiate a mechanism to make post-closing adjustments to the purchase price — for example, based on calculations of the target company’s working capital at the time of closing or an “earnout” based on the performance of the company for a specified period after closing. Because parties often disagree over these adjustments, the agreement generally will include a framework for resolving disputes. Although the particulars can vary, the parties typically will agree to negotiate in good faith and, if negotiations fail, to submit any remaining disputes to an independent accountant for final resolution. (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/05/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_7.jpg606833Mason Parhamhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngMason Parham2024-05-06 09:02:532024-05-09 12:44:24An Arbitration by Any Other Name Is Still an Arbitration, Unless It’s an Expert Determination: Recent Cases Apply Delaware’s Authority Test to ADR Provisions
In Harrison Metal Capital, an investment fund with an 18% stake in a privately held company called MixMax, Inc. believed the CEO was committing financial improprieties, but found no legal recourse for its complaint. Although certain features of the case are unusual as a factual matter, the Court of Chancery’s analysis of demand futility in a company with a controlling stockholder will be applicable in more conventional derivative actions as well.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robin E. Wechkinhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobin E. Wechkin2024-04-29 09:03:082024-04-29 09:37:58Controller’s Ability to Appoint and Remove Directors at Will Insufficient to Establish Demand Futility
The Delaware Court of Chancery is one of limited jurisdiction, accessible only when complete relief at law is unavailable. On March 4, 2024, in Graciano v Adobe Healthcare, Inc., Vice Chancellor Glasscock continued a trend from other recent cases toward guarding the limits of the Court of Chancery’s equitable jurisdiction, when he concluded that a claim for release of funds in escrow established through an M&A transaction was not equitable in nature—even though framed as a request for specific performance—because a declaratory judgment was the only judicial action required to afford the Plaintiff relief.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2023/05/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_11.jpg606833Heather Benzmiller Sultanianhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngHeather Benzmiller Sultanian2024-04-23 09:04:262024-06-04 15:42:35The Court of Chancery Prunes Back the Limits of Its Jurisdiction
A new federal court decision, Madsen v. Sidwell Air Freight1, addresses the scope of general personal jurisdiction over corporations after the Supreme Court’s 2023 decision in Mallory v. Norfolk Southern Railway2. Madsen suggests that many states’ laws stop short of asserting the kind of registration-based jurisdiction that Mallory approved. This decision highlights key arguments that in-house litigators should bear in mind if their companies do business in multiple states.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Tobias S. Loss-Eatonhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngTobias S. Loss-Eaton2024-04-17 09:04:482024-04-17 09:34:26Corporate Personal Jurisdiction, Mallory, and Forum-Shopping: What’s Next for Multistate or International Corporations?
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Buyer Beware: What to Know About the DOJ’s Policy on Self-Reporting in M&A
What happens when you buy somebody else’s problems? A new policy from the U.S. Department of Justice (DOJ) is encouraging companies to disclose the misconduct of the companies they buy. The DOJ says it won’t prosecute businesses that voluntarily report wrongdoing found during the mergers and acquisitions process.
(more…)
Samir A. Gandhi
New York
sgandhi@sidley.com
Kenneth A. Polite Jr.
Washington, D.C., New York
kpolite@sidley.com
You May Think You Are a Partner, But… Chancery Opinion Reaffirms That Any Agreement, Written or Oral, Must Include All Material Terms
In a recent decision by Vice Chancellor Glasscock of the Delaware Court of Chancery, Handler v. Centerview Partners Holdings, L.P., the Vice Chancellor considered whether a partnership agreement existed based on a purported oral agreement. The Court of Chancery’s decision provides useful guidance to practitioners and reaffirms that, while Delaware law permits oral agreements, including partnership agreements, that agreement must include all material, essential terms – an agreement to agree is insufficient.
(more…)
Sophia A. Blake
New York
sblake@sidley.com
Andrew W. Stern
New York
astern@sidley.com
Delaware’s Appealing Interlocutory Review Regime
In a recent case, Palkon v. Maffei (TripAdvisor), the Delaware Supreme Court accepted an interlocutory appeal of the Court of Chancery’s denial of shareholders’ motion to dismiss. Such appeals are not common: Delaware Supreme Court Rule 42(b) expressly provides that “[i]nterlocutory appeals should be exceptional, not routine, because they disrupt the normal procession of litigation, cause delay, and can threaten to exhaust scarce party and judicial resources.” Even more unusually, the Delaware Supreme Court took this step over the Court of Chancery’s refusal to certify the appeal. This decision and others demonstrate the Delaware Supreme Court’s willingness to step in affirmatively, even mid-case, to ensure the coherence and predictability of corporate governance law — particularly when a matter of public concern is at stake. (more…)
Jim Ducayet
Chicago
jducayet@sidley.com
Deepa A. Chari
Chicago
dchari@sidley.com
An Arbitration by Any Other Name Is Still an Arbitration, Unless It’s an Expert Determination: Recent Cases Apply Delaware’s Authority Test to ADR Provisions
In M&A transaction agreements, contracting parties frequently negotiate a mechanism to make post-closing adjustments to the purchase price — for example, based on calculations of the target company’s working capital at the time of closing or an “earnout” based on the performance of the company for a specified period after closing. Because parties often disagree over these adjustments, the agreement generally will include a framework for resolving disputes. Although the particulars can vary, the parties typically will agree to negotiate in good faith and, if negotiations fail, to submit any remaining disputes to an independent accountant for final resolution. (more…)
Mason Parham
Dallas
mparham@sidley.com
Robert S. Velevis
Dallas
rvelevis@sidley.com
Spencer M. Stephens
Controller’s Ability to Appoint and Remove Directors at Will Insufficient to Establish Demand Futility
In Harrison Metal Capital, an investment fund with an 18% stake in a privately held company called MixMax, Inc. believed the CEO was committing financial improprieties, but found no legal recourse for its complaint. Although certain features of the case are unusual as a factual matter, the Court of Chancery’s analysis of demand futility in a company with a controlling stockholder will be applicable in more conventional derivative actions as well.
(more…)
Robin E. Wechkin
Seattle
rwechkin@sidley.com
The Court of Chancery Prunes Back the Limits of Its Jurisdiction
The Delaware Court of Chancery is one of limited jurisdiction, accessible only when complete relief at law is unavailable. On March 4, 2024, in Graciano v Adobe Healthcare, Inc., Vice Chancellor Glasscock continued a trend from other recent cases toward guarding the limits of the Court of Chancery’s equitable jurisdiction, when he concluded that a claim for release of funds in escrow established through an M&A transaction was not equitable in nature—even though framed as a request for specific performance—because a declaratory judgment was the only judicial action required to afford the Plaintiff relief.
(more…)
Heather Benzmiller Sultanian
Chicago
hsultanian@sidley.com
Tyler M. Wood
Chicago
tyler.wood@sidley.com
Corporate Personal Jurisdiction, Mallory, and Forum-Shopping: What’s Next for Multistate or International Corporations?
A new federal court decision, Madsen v. Sidwell Air Freight1, addresses the scope of general personal jurisdiction over corporations after the Supreme Court’s 2023 decision in Mallory v. Norfolk Southern Railway2. Madsen suggests that many states’ laws stop short of asserting the kind of registration-based jurisdiction that Mallory approved. This decision highlights key arguments that in-house litigators should bear in mind if their companies do business in multiple states.
(more…)
Tobias S. Loss-Eaton
Washington, D.C.
tlosseaton@sidley.com
Chike B. Croslin
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Andrew W. Stern
astern@sidley.com
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Heather Benzmiller Sultanian
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Robert S. Velevis
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