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Chancery Court Denies Pleading-Stage Dismissal Under Corwin due to Presence of Control Group

Posted by on Friday, March 12, 2021 in Delaware Corporate Law Bulletins, En Banc, Volume 74.

Robert S. Reder & Robert W. Dillard | 74 Vand. L. Rev. En Banc 61 (2021) |

Garfield further limits the reach of Corwin: even if all the elements are met, the presence of a “control group” realizing benefits from a transaction not shared with other stockholders negates the availability of Corwin. In light of the end goal shared by BlackRock and HC Partners, together with their “historical and transaction-specific ties,” Vice Chancellor McCormick found, at least for purposes of pleading-stage dismissal, that BlackRock and HC Partners had in fact formed a control group with the power to exercise at least transaction-specific control in connection with the Reorganization. As a result, Corwin was not available to shield the PennyMac defendants from a trial on the merits in which they would have to carry the heavy burden of proving that the Reorganization was entirely fair.

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Robert S. Reder and Robert W. Dillard