By Matthew Solum, Kirkland & Ellis LLP
The Supreme Court of Delaware held in Corwin v. KKR Financial Holdings that litigation challenges to mergers are subject to the deferential “business judgment” standard of review when the transaction was approved by the “fully informed, uncoerced majority of disinterested stockholders.” The decision set a benchmark for merger litigation, according to Matthew Solum of Kirkland & Ellis, as transaction parties have sought thereafter to ensure that their stockholder votes qualified for so-called “Corwin cleansing”—the assurance that any later challenge would be subject to the business judgment rule. He examines post-Corwin cases, which have focused on the question of what it means for the disinterested stockholders to be “fully informed” and “uncoerced,” and whether decisions have gone in favor of, or against, defendants.
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