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In re Multiplan Corp. Stockholders Litig.

This case dealt with a motion to dismiss the claims of the plaintiffs (by the defendants) in a stockholder suit against a special purpose acquisition company (SPAC). The claims were primarily that the plaintiffs’ claims were derivative, which failed to plead demand futility and that the business judgment rule applied. Many of the parties’ arguments centered around unique characteristics of a SPAC. In concluding that the entire fairness standard of review applied, the Delaware Chancery Court noted that “the fact that a reasonably conceivable impairment of public stockholders’ redemption rights—in the form of materially misleading disclosures—has been pleaded in this case.” The case was to go forward against all but two defendants.

Delaware Chancery Court Allows Breach of Fiduciary Suit to Move Forward on a SPAC

This case dealt with a motion to dismiss the claims of the plaintiffs (by the defendants) in a stockholder suit against a special purpose acquisition company (SPAC). The claims were primarily that the plaintiffs’ claims were derivative, which failed to plead demand futility and that the business judgment rule applied. Many of the parties’ arguments centered around unique characteristics of a SPAC. In concluding that the entire fairness standard of review applied, the Delaware Chancery Court noted that “the fact that a reasonably conceivable impairment of public stockholders’ redemption rights—in the form of materially misleading disclosures—has been pleaded in this case.” The case was to go forward against all but two defendants.

New DOL process agreement confronts control issue in ESOP valuations

The Department of Labor recently settled ESOP litigation with the trustee Farmers National Bank of Danville (FNB).

Best Practices – Thought Leadership in Valuation, Damages, and Transfer Price Analysis

March 2020 Hardcover

Robert F. Reilly, Robert P. Schweihs

Best Practicesincludes more than 1,200 pages of thought leadership on a wide range of topics, including the valuation of private company securities and intangible assets, valuation for property tax purposes, valuation for ESOPs, fair value measurement for financial accounting purposes, transfer price analysis, and economic damages measurement. Learn more >>

DOL Processing Agreement Contains Stringent Rules on Controlling Interest Transactions, Indemnification

Under new processing agreement between DOL and specific ESOP trustee, trustee is bound by strict rules on how to handle controlling-interest acquisitions and indemnification issues; trustee must ensure ESOP plan acquires a series of specified rights before approving payment of a control premium.

Scalia v. Farmers National Bank of Danville & Weddle Bros. Const. Co.

Under new processing agreement between DOL and specific ESOP trustee, trustee is bound by strict rules on how to handle controlling-interest acquisitions and indemnification issues; trustee must ensure ESOP plan acquires a series of specified rights before approving payment of a control premium.

In re Tesla Motors Stockholder Litig.

Court of Chancery says Tesla dissenting shareholders allege sufficient facts to show company CEO, Elon Musk, was a controlling shareholder, despite holding a minority interest; court allows breach of fiduciary claims concerning acquisition of related company to proceed.

Court Allows Tesla Dissenting Shareholder Suit to Go Forward

Court of Chancery says Tesla dissenting shareholders allege sufficient facts to show company CEO, Elon Musk, was a controlling shareholder, despite holding a minority interest; court allows breach of fiduciary claims concerning acquisition of related company to proceed.

Chancery says bids in squeeze-out merger are not comparable

The Delaware Court of Chancery recently cut short a challenge to a going-private merger when it dismissed the plaintiffs' complaint. The plaintiffs unsuccessfully argued the defendants breached their fiduciary duties when they favored the controller's lower bid over a third-party bidder's higher offer.

Expert’s Poor Grasp of Valuation Issues Undercuts Shareholder Suit

Appeals court affirms soundness of going private merger; court says plaintiffs failed to point to better offer and their expert lacked formal accounting, economics, and valuation training and displayed a light grasp of issues related to company’s value.

Rubin v. Bedford

Appeals court affirms soundness of going private merger; court says plaintiffs failed to point to better offer and their expert lacked formal accounting, economics, and valuation training and displayed a light grasp of issues related to company’s value.

Corwin v. KKR Fin. Holdings LLC

Regarding breach of fiduciary duty claims, Delaware Supreme Court says business judgment rule (lower standard of review) applies where disinterested stockholder majority approves merger with third party and vote was uncoerced and fully informed.

Zelouf Court Reasserts Its Objection to DLOM

New York court rejects majority owners’ post-trial objection to prior ruling against DLOM based on unlikelihood of sale of the business; court is guided by fairness, noting “a DLOM here would be the economic equivalent of imposing a minority discount.”

Zelouf International Corp. v. Zelouf (II)

New York court rejects majority owners’ post-trial objection to prior ruling against DLOM based on unlikelihood of sale of the business; court is guided by fairness, noting “a DLOM here would be the economic equivalent of imposing a minority discount.”

Valuations Underpin DE Chancery’s Ruling in Going-Private Merger

DE Chancery adopts business judgment review standard where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor demonstrate merger was favorable to minority stockholders.

In re MFW Shareholders Litig.

DE Chancery adopts business judgment review standard where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor demonstrate merger was favorable to minority stockholders.

Craig Alan Dunn v. Matrix Exhibits, Inc.

The Tennessee Court of Appeals reversed a lower court’s decision denying the plaintiff the value of an interest in the defendant because the value was too speculative in this breach of contract action.

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