Lewis H. Lazarus partner with Morris James. Courtesy photo Chancery Finds Defendants Post-Trial Proved Fairness of Controlling Stockholder Transaction
When a controlling stockholder is on both sides of a transaction, the Delaware courts' most searching standard of review, entire fairness, is likely to apply. That generally means that a plaintiff who can credibly allege unfairness is likely to survive a motion to dismiss. It does not follow, however, that plaintiff will prevail at trial.
September 07, 2022 at 11:40 AM
5 minute read
Corporate Entities
When a controlling stockholder is on both sides of a transaction, the Delaware courts' most searching standard of review, entire fairness, is likely to apply. That generally means that a plaintiff who can credibly allege unfairness is likely to survive a motion to dismiss. It does not follow, however, that plaintiff will prevail at trial. If defendants' trial evidence viewed holistically shows a fair process and a fair price, the Delaware Court of Chancery will enter judgment in defendants' favor. The court's decision in In Re BGC Partners Inc. Derivative Litigation, Cons. C. A. No. 2018-0722-LWW (Del. Ch. Aug. 19, 2022), illustrates this dynamic.
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