Delaware Business Litigation Report

Court of Chancery Applies Revlon to a Warrant to Buy

Carr v. New Enterprise Associates, Inc., C.A. No. 2017-0381-AGB (Del. Ch. Mar. 26, 2018)

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.

Share