Mark Felger and Barry Klayman, both members of Cozen O’Connor’s Bankruptcy, Insolvency & Restructuring practice group, discuss a Delaware Supreme Court case addressing the issue of honesty and fair dealing among directors in The Delaware Business Court Insider. In an earlier article, Mark and Barry questioned how the decision by former Vice Chancellor Donald F. Parsons in OptimisCorp v. Waite would fare on appeal. The Delaware Supreme Court has now provided the answer, affirming the judgment of the Court of Chancery, but expressly declining to embrace Parsons’ framework for analyzing whether the defendant directors behaved inequitably by intentionally concealing from the CEO and other directors their intention to remove the CEO and amend a stockholder agreement granting him blocking rights at a special meeting of the board. Mark and Barry write, “The court’s order should be read as affirming the importance of honesty and fair dealing among directors regardless of how they come to the board or the power disparities among them.”
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