Although there are fewer deals since the current economic crisis began, courts have continued to make important law governing the behavior of directors considering the sale of a company. Despite a political climate tilting in favor of stricter scrutiny of corporate conduct, appellate courts have reaffirmed the principle of judicial deference to the business judgment of disinterested boards of directors and resisted lower court attempts to ratchet up the standard of review.
In the significant — perhaps even landmark — decision of Lyondell Chemical Corp. v. Ryan , No. 401, 2008, 2009 WL 790477 (Del. 2009), the Delaware Supreme Court in April issued its broadest statement yet affirming the discretion of directors to manage the sale of a company as they see fit. The court firmly rejected post-merger stockholder claims that Lyondell’s directors failed to act in good faith in selling the company, even assuming (given the summary judgment posture) that they did nothing to prepare for an impending offer and did not conduct an “auction” before entering into a merger agreement.
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