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Chancery Court Declines to Apply Corwin at Pleading Stage to “Cleanse” Breach of Fiduciary Duty Claim Due to Material Non-Disclosures

Posted by on Wednesday, January 15, 2020 in Delaware Corporate Law Bulletins, En Banc.

Robert S. Reder & Robert W. Dillard | 73 Vand. L. Rev. En Banc 17 |

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“In late 2018, the Delaware Court of Chancery (the “Chancery Court”) once again denied pleading-stage application of Corwin when faced with well-pled allegations a stockholder vote was not fully informed. In In re Xura, Inc. Stockholder Litig., C.A. No. 12698-VCS, 2018 WL 6498677 (Del. Ch. Dec. 10, 2018) (“Xura”), Vice Chancellor Joseph R. Slights III refused to invoke Corwin to dismiss a post-closing damages action—despite disinterested stockholder approval of a corporate buyout—in light of allegations of undisclosed negotiations by a target company’s conflicted chief executive officer with representatives of the buyer. The Vice Chancellor also refused to dismiss plaintiff’s breach of fiduciary duty claim, even though plaintiff also had pending a related appraisal action under DGCL § 262.”

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