The Delaware Court of Chancery, in Lance Salladay v. Bruce L. Lev, et al. [Intersections], C.A. No. 2019-0048-SG, memo. op. (Del. Ch. Feb. 27, 2020), found that appointment of a special committee to consider a controlling stockholder transaction was ineffective for purposes of standard shifting under In re Trados, Inc. Shareholder Litigation, C.A. No. 1512-VCL (consol.), opinion (Del. Ch. Aug. 16, 2013), where plaintiff alleged that the committee was not constituted before substantive economic discussions, and that stockholder ratification under Robert A. Corwin, et al. v. KKR Financial Holdings, LLC, et al., No. 629, 2014, opinion (Del. Oct. 2, 2015), because the company did not disclose all material information about the transaction to stockholders.
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Pepper Hamilton discusses the decision in Ab Initio 2.0: Even Without a Controller, Special Committees Must Be Formed Before Economic Negotiations Begin.
Saul Ewiing discusses the decision in Roads to Business Judgment Protection in Transactions with Majority-Conflicted Boards.
Paul Weiss discusses the decision in Delaware Court of Chancery Provides Guidance around Special Committee Approvals in Non-Controller Conflicted Transactions.
Francis Pileggi discusses the decision in Chancery Determines Standard Applicable to Contested Transaction.
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