Delaware Business Litigation Report

Court Of Chancery Explains Delaware Freeze Out Law

In Re CNX Corporation Shareholders Litigation, C.A. 5377-VCL (July 5, 2010)

Perhaps no area of Delaware corporate law is as confusing as that applicable when a company is taken private by a majority owner in a freeze out of the other shareholders.  This scholarly opinion explains that at least 3 different standards of review have been applied by the Court of Chancery in its review of such transactions.  As a result, the Court has certified its latest decision for appeal to the Delaware Supreme Court with a request that the law be clarified.

Until that clarification is issued, however, this is the definitive analysis of Delaware law in this area and deserves to be read, carefully.

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