Paramount is one of the key recent Court of Chancery M&A decisions primarily relying on Corwin to dismiss post-closing fiduciary duty claims against the merger target’s directors. The Delaware Supreme Court’s decision in Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015), reaffirmed the power of disinterested, uncoerced and fully-informed stockholder approval to invoke the business judgment rule and immunize M&A transactions from breach of fiduciary duty claims. In Paramount, while finding that the stockholder vote was fully-informed and uncoerced, the Court of Chancery flagged one of the last remaining wrinkles under Corwin – the “apparent tension” between Corwin and In re Santa Fe Pacific Corporation Shareholder Litigation, 669 A.2d 59 (Del. 1985), which engaged in Unocal review of deal protection measures despite stockholder approval. After observing that the Delaware Supreme Court “did not discuss or expressly overrule” Santa Fe in Corwin, the Paramount decision found it unnecessary to resolve “the apparent tension” between Corwin and Santa Fe because the alleged deal protection measures at issue satisfied Unocal enhanced scrutiny in any event. In re Paramount Gold and Silver Corp. S’holder Litig., 2017 WL 1372659 (Del. Ch. April 13, 2017) (Bouchard, C.).
In sum, Delaware courts have applied Corwin to dismiss a number of post-closing challenges to mergers in 2017 and Paramount represents one of the key decisions that illustrates the significance and scope of the protection that stockholder approval affords M&A transactions under Delaware law.
Morris James LLP served as primary counsel to Paramount Gold and Silver Corporation and its former Board Member Defendants Christopher Crupi, John Carden, Michel Stinglhamber, Robert Dinning, Eliseo Gonzalez-Urien, Christopher Reynolds, and Shawn Kennedy.