Akorn v. Fresenius: A MAC in Delaware

By David Leinwand, James E. Langston & Mark E. McDonald on October 11, 2018

Until Vice Chancellor Laster’s decision last week in Akorn Inc. v. Fresenius KABI AG,[1] no Delaware court had released an acquiror from its obligation to close a transaction as a result of the occurrence of a “Material Adverse Effect.”[2] The cases previously adjudicated in Delaware all had required the acquiror to close, often despite a significant diminishment in target value and, in some, the court criticized the acquiror for seeking to avoid…

Cleary M&A and Corporate Governance Watch

The Peril of the Implied Covenant of Good Faith in LLC Agreements

By David Leinwand on March 22, 2018

The general policy of the Delaware Limited Liability Company Act (the “Act”) is “to give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements.”[1] Specifically, with respect to duties, the Act provides that to the extent law or equity would impose a fiduciary or other duty on a member or manager of an LLC, that duty may be “restricted or eliminated by provisions…

Cleary M&A and Corporate Governance Watch

Business Judgment Rule Applied to Going-Private Mergers in New York

By David Leinwand on May 11, 2016

Courts have long applied the exacting “entire fairness” standard to one-step, going-private merger transactions. In Delaware, after years of agonizing by courts and commentators, this changed in 2013 in Kahn v. M&F Worldwide Corp. (“MFW”).[1] MFW held that if certain procedural protections were observed in the course of the transaction the far more deferential business judgment standard would be applied. The required safeguards included, most notably, negotiation and approval of the transaction by…

Cleary M&A and Corporate Governance Watch

Controlling Minority Stockholders — When Does a Minority Constitute a Majority?

By David Leinwand on April 5, 2016

In two recent cases, the Delaware courts addressed the question of when a minority stockholder has sufficient influence over a corporation to be deemed a controlling stockholder. The issue typically arises in the context of a transaction between the minority stockholder and the corporation, such as an attempt to acquire the corporation’s publicly held shares. In such cases, the stakes for the minority stockholder can be quite high as transactions between a corporation and a…

David Leinwand

Akorn v. Fresenius: A MAC in Delaware

The Peril of the Implied Covenant of Good Faith in LLC Agreements

Business Judgment Rule Applied to Going-Private Mergers in New York

Controlling Minority Stockholders — When Does a Minority Constitute a Majority?

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