John D. Cromie, chair of Connell Foley’s Corporate & Business Law Group, and John W. Dalo, an associate in the Group, authored the article “A Diamond in the Rough” for the Fall/Winter 2016 issue of USLAW Magazine.
In a case involving the merger of two major jewelry retailers, the Delaware Supreme Court recently issued a ruling that will offer significant protection to directors and financial advisors navigating change of control transactions. In Singh v. Attenborough, No. 645, 2015, 2016 Del. LEXIS 276 (May 6, 2016), the Court held that the highly deferential business judgment rule applies to breach of duty claims against a company’s board of directors when a majority of a company’s fully informed, uncoerced, and disinterested stockholders vote in favor of a merger. This decision affords protection to directors and, under certain circumstances, a company’s investment bankers and financial advisors. As noted in the decision, application of the business judgment rule typically results in the dismissal of breach of duty claims against directors. This was the result in the Singh case. Significantly, the Court also concluded that a shareholder vote in this context will also result in the dismissal of claims against a company’s financial advisors for allegedly aiding and abetting the directors’ alleged breaches.
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