Recently, in Lyondell Chem. Co. v. Ryan, the Delaware Supreme Court reaffirmed the protections afforded directors in their efforts to obtain the best price in a corporate sale and provided important clarification of directors’ duties in navigating change of control transactions. The Delaware Court of Chancery had denied a motion for summary judgment by Lyondell’s independent directors, finding that the record presented a triable issue of fact on the question of whether “unexplained inaction” on the part of the directors implied a knowing disregard of their fiduciary duties to the shareholders. The Delaware Supreme Court concluded that the Court of Chancery had imposed the fiduciary duties concerning change of control transactions – i.e., Revlon duties – on the Lyondell directors prematurely and too rigidly, and mistakenly had “equated an arguably imperfect attempt to carry out Revlon duties with a knowing disregard” of their fiduciary duties.
Please click here to read a Client Advisory by Edwards Angell Palmer & Dodge.
