Two recent Delaware Chancery Court opinions indicate that the court is taking last year’s Corwin decision to heart, while a third suggests that there’s still room for debate on the scope of the decision. As this Morris James blog explains:
Larkin v. Shah is one of two recent Court of Chancery decisions explaining that the Corwin case really does mean that there is an “irrebuttable business judgment rule” that bars challenges to a merger approved by a majority of the fully-informed, disinterested and uncoerced stockholders, in the absence of a conflicted controlling stockholder.
Thus, along with In re Volcano Corporation Stockholder Litigation at least two members of the Court of Chancery will allow only a well-pleaded claim for waste to survive dismissal in such circumstances. It is less clear that the Chancellor agrees with the word “irrebuttable” in those circumstances, however. See City of Miami v. Comstock, C.A. 9980-CB (Del. Ch. Aug. 24, 2016) (applying Corwin but still examining whether the plaintiffs had alleged a basis for entire fairness review).
– John Jenkins