Court of Chancery Applies Revlon to a Warrant to Buy
This decision addresses a host of interesting topics. First, it declines to invoke the so-called step-transaction doctrine under which the Court treats the steps in a series of formally separate but substantially-linked transactions involving the transfer of property as a single transaction. Second, it declines to apply the mootness doctrine in a challenge to an unexercised warrant. Third, it wrestles with deciding whether challenges to a financing and a warrant issuance are direct or derivative claims. Fourth, it address the pre-suit demand on the board requirement. Fifth, it finds a sufficiently pled claim of aiding and abetting a breach of fiduciary duty. Sixth, it decides that intermediate scrutiny (i.e., Revlon) may apply when a party is granted an option to acquire a company under a warrant. Finally, it applies Cornerstone to dismiss exculpated directors from a money damages action where the complaint failed to adequately plead a duty of loyalty claim against them.