Janet Gochman, Lynn Neuner and Jonathan Youngwood Author Article on Recently Denied Dismissal in Delaware Chancery Court
04.29.22
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Janet Gochman, Lynn Neuner and Jonathan Youngwood authored an article titled, “Creditor Deemed a Controller by Dint of Its Voting Power,” which was published by the Harvard Law School Forum on Corporate Governance. The article explores the Court of Chancery of Delaware’s recently denied dismissal of a breach of fiduciary duty claim in a putative class action brought by a target company’s former stockholders against the target’s largest creditor which had threatened to block the target’s pending SPAC merger unless the target’s board agreed to a series of amendments to debt and warrant agreements. The article explains that the court concluded that plaintiffs sufficiently pled that the creditor was the target’s controller by virtue of its voting power and, therefore, owed the target’s stockholders a duty of loyalty, as well as that plaintiffs pled that the creditor breached that duty by refusing to vote its proxy in favor of the merger unless it received the amendments it sought.
To read the full article, please click here.