March 17, 2014
Decision establishes new standard for going-private deals involving controlling shareholders.
On March 14, the Delaware Supreme Court affirmed the lower court’s decision by Chancellor Strine in In re MFW Shareholders Litigation, agreeing with arguments Willkie presented in May 2013.
The Supreme Court held that the deferential business judgment rule rather than the entire fairness standard applies to going-private transactions involving controlling stockholders as long as there is a well functioning special committee and a majority of the minority voting condition. The court found that both protections existed.
Delaware law has long held that the entire fairness standard applies to such transactions, but that standard means that litigation involving such transactions cannot be resolved at an early stage of legal proceedings.
The MFW ruling is a landmark opinion under Delaware law and makes it more likely that such transactions – if they have the correct procedural protections – will be reviewed and resolved earlier than at a full trial.
The Willkie team representing the MFW Special Committee included litigation partners Tariq Mundiya (who argued the case in the Delaware Supreme Court) and Todd Cosenza, and corporate partners Jeffrey Hochman and Michael Schwartz. Litigation associates Christopher Miritello and Jill Grant also worked on the case.
