The Delaware Supreme Court in Corwin v. KKR Financial Holdings LLC, No. 629, 2014 (Del. Oct. 2, 2015), has recently issued an opinion of substantial import in connection with the standard of review utilized by the Court in the context of a merger transaction, which is a must-read for all D&O litigation attorneys practicing in the Court of Chancery.

Specifically, the Court held that in a merger transaction with a party other than a controlling shareholder, the business judgment standard of review will apply where the voluntary informed judgment of the disinterested shareholders to approve the transaction was obtained.

This case is very significant given that claims for breach of fiduciary duty against D&Os, in the merger context (not with a controlling shareholder), will be more vulnerable to dismissal if the transaction is approved by the voluntary informed judgment of disinterested shareholders–regardless of whether the board is disinterested.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.