Delaware Supreme Court Confirms Business Judgment Rule Applies “Irrebuttably” After Disinterested Shareholder Approval In Non-Controller Transactions—<em>Volcano</em>

Delaware Supreme Court Confirms Business Judgment Rule Applies “Irrebuttably” After Disinterested Shareholder Approval In Non-Controller Transactions—Volcano


By: Abigail Pickering Bomba, Warren S. de Wied, Steven Epstein, Arthur Fleischer, Jr., David J. Greenwald, Scott B. Luftglass, Philip Richter, Robert C. Schwenkel, Peter L. Simmons, Gail Weinstein

In Volcano Stockholders Litigation, the Delaware Supreme Court, on February 9, 2017, in a one-sentence affirmance, upheld the Court of Chancery's decision dismissing the lawsuit at the pleading stage of the litigation. The affirmance confirms that, under the seminal 2015 Corwin decision, the business judgment rule will apply irrebuttably following fully-informed, uncoerced approval of a non-controller transaction by the disinterested stockholders. The decision is consistent with the Delaware courts' continued expansive interpretation of Corwin, which has resulted in a strong trend of early dismissal of litigation challenging M&A transactions (not involving a controller). We discuss the decision further in the attached M&A Briefing.

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