K. Tyler O'Connell

High Court Again Denies 'Corwin' Deference Due to Material Omissions Concerning Sale Process

Earlier this year, the Delaware Supreme Court held that Corwin deference was not warranted where a recommendation statement to stockholders disclosed that a founder and board chairman abstained from recommending in favor of an M&A transaction, but omitted certain facts evident from meeting minutes, such as his disappointment with the company’s management and the transaction price, and his view that it was not the right time to sell. See Appel v. Berkman, 180 A.3d 1055 (Del. 2018).   More ›

Share

Chancery Court Declines Stockholder Invitations to Expand Transactions Subject to Appraisal Rights

Appraisal rights have been the subject of increased focus in the current, post-Corwinenvironment, in which a fully-informed noncoerced stockholder vote suffices to dispose of most M&A challenges. In two recent decisions, the Delaware Court of Chancery considered attempts by stockholder-plaintiffs to expand the scope of transactions subject to appraisal rights.  In both cases, the court reinforced that appraisal rights are not available in transactions that do not satisfy 8 Del. C. Section 262’s express criteria. In doing so, the court rejected stockholder-plaintiffs’ arguments that appraisal rights should be available in the circumstances.

Akile v. Rite Aid, C.A. No. 2018-0305-AGB (Del. Ch. May 9, 2018) (Transcript).

In early May, the Court of Chancery declined to expedite an M&A challenge premised upon Rite Aid Corp.’s (Rite Aid) alleged failure to disclose that its proposed acquisition by Albertsons Companies, Inc. (Albertsons) triggered appraisal rights.

The acquisition at issue is to be effected by a merger between Rite Aid and a wholly owned subsidiary of Albertsons. Under the merger agreement, each share of Rite Aid stock will be exchanged for a partial share of Albertsons common stock, plus (either an additional fractional share of Albertsons stock or cash, at the election of each stockholder. More ›

Share

Court Sustains 'Bad Faith' Claim Challenging Compensation Paid to Allegedly Incapacitated Executive

In Feuer v. Redstone, (Del. Ch. Apr. 19, 2018), the Delaware Court of Chancery considered a motion to dismiss derivative claims challenging compensation CBS Corp. paid to nonagenarian Sumner Redstone after he allegedly became physically and mentally incapacitated and ceased rendering meaningful services. Based on the “extreme factual scenario” alleged, the court declined to dismiss certain claims stemming from CBS’s board of directors’ alleged failure to consider terminating Redstone’s “at will” employment, resulting in his continued receipt of millions of dollars in salary payments. More ›

Share

Delaware Public Policy Does Not Preclude D&O Insurance Coverage for Fraud

In Arch Insurance v. Murdock, (Del. Ch. Mar. 1, 2018), a D&O insurance coverage dispute, the state Superior Court’s complex commercial litigation division reasoned broadly to hold that, absent a contrary choice of law clause, Delaware law applies to Delaware corporations’ D&O insurance policies, and that Delaware public policy does not prohibit insuring losses from insureds’ breaching the fiduciary duty of loyalty through fraudulent conduct. More ›

Share

Chancery Declines Confidential Treatment to Nonparty’s Claimed Sensitive Business Info

American courts have long recognized that the public enjoys a First Amendment right of access to judicial proceedings and records.  While forceful, the right is only presumptive, and the public’s interest in access may be overcome with an adequate showing of need. More ›

Share