In In re Del Monte Foods Company Shareholders Litigation, the Court of Chancery found on a preliminary record that a proposed $5.3 billion cash merger (including assumption of debt) with a group of private equity buyers was potentially tainted by alleged misconduct by the target banker, with the alleged knowing participation of the buyers.

In recent months, the Delaware courts have addressed important issues for Delaware corporations and their advisors.

In Golden Telecom, the Supreme Court declined to impose strict requirements on the trial court’s determination of fair value, including deference to merger price or a requirement that the subject company be bound by previously disseminated company-specific data. In AT&T Mobility, the Court of Chancery held that a stockholder has the entire 20-day statutory period to consider whether or not to seek appraisal, and may even revoke a prior waiver of appraisal rights during that period, under certain circumstances.

In King v. VeriFone Holdings, Inc., the Delaware Supreme Court reversed the Court of Chancery’s decision that established a bright-line rule barring stockholder-plaintiffs from seeking books and records pursuant to 8 Del. C. § 220 (“Section 220”) solely because they filed a derivative action first.

In Narrowstep, Inc. v. Onstream Media Corp. the Court of Chancery, expressly relying on the motion to dismiss standard articulated by the United States Supreme Court in Bell Atlantic v. Twombly, dismissed an implied covenant of good faith and fair dealing claim but refused to dismiss claims for breach of fiduciary duty, fraud and unjust enrichment in connection with the failed merger between Narrowstep Inc. and Onstream Media Corporation.

At a status conference in Scully v. Nighthawk Radiology Holdings, Inc., Vice Chancellor Laster stated that there was prima facie evidence of collusive forum shopping in connection with a settlement of multi-jurisdictional, representative litigation challenging the fairness of a merger and announced that he would appoint special counsel to the Court to investigate these issues and possibly to recommend disciplinary action.

In Blades v. Wisehart, the Court of Chancery held that a corporation had not validly effectuated a stock split because it had not complied with the requisite corporate formalities, notwithstanding that the corporation’s board and stockholders all had the subjective intent to effectuate the split.

Following trial in SV Investment Partners, LLC v. ThoughtWorks, Inc. the Court of Chancery rejected a preferred stockholder’s argument that the phrase “funds legally available” is equivalent to “surplus” in the context of redemption rights and entered judgment against the preferred stockholder.

The Court of Chancery in In re Art Technology Group, Inc. Shareholders Litigation enjoined a merger until the target company disclosed to its stockholders additional information about its financial advisor’s prior work for the buyer. In Steinhardt v. Howard-Anderson the Court of Chancery applied the enhanced Revlon standard of review to a stockholder’s motion to preliminarily enjoin the acquisition of Occam Networks, Inc. by Calix, Inc. whereby Occam stockholders would receive cash and stock consideration.

This article describes the impetus for the nonstock amendments and explains the structure and nuances of those amendments.