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- Title
DID DELAWARE REALLY KILL CORPORATE LAW? SHAREHOLDER PROTECTION IN A POST-CORWIN WORLD.
- Authors
GATTI, MATTEO
- Abstract
Corwin v. KKR, one of many recent cases aiming to mitigate the "deal tax" in M&A represented by baseless litigation, is considered one of the most important corporate law decisions of the 2000s. Corwin shields directors from the enhanced scrutiny of Revlon in favor of the business judgment rule whenever a transaction "is approved by a fully informed, uncoerced vote of the disinterested stockholders." Many legal commentators see Corwin as the poster child of an ongoing process that has been emphatically labeled with expressions such as "Delaware's retreat," "the fall of Delaware standards," and even "the death of corporate law;" in fact, the mainstream view among scholars is that Corwin is a setback in shareholder protection. This Article challenges such view and argues that shareholder protections in Revlon M&A deals have not suddenly vanished. First, Corwin applies only in the presence of certain preconditions: plaintiffs' efforts have simply been rechanneled around them. Corwin has in fact expanded the breadth of litigation challenging lack of "full information." Also, the requirement that shareholder approval be uncoerced is bound to pose a limit on certain director abuses in the sale process and in the adoption of deal protection devices. This Article reports of original empirical data on transactions post Corwin suggesting that not much has changed in dealmaking: in other words, the decision has not opened the floodgates to bad process, possibly because deal planners anticipate the possibility that rival bids will arise, possibly because of the preconditions to Corwin are taken very seriously (especially if coercion constrains ability to offer outrageous deal protection devices), and possibly because corporate planners adhere to norms and best practices and in the worst cases deal lawyers rein in their clients' impulses.
- Subjects
CORPORATION law; STOCKHOLDERS; ATTORNEY &; client; FALSE imprisonment; STOCKHOLDERS' voting
- Publication
New York University Journal of Law & Business, 2020, Vol 16, Issue 2, p345
- ISSN
1558-5778
- Publication type
Article