Acquisitions of biotech companies with development-stage drug candidates often include earnout agreements. The buyer pays the seller’s stockholders with cash or stock upfront, and the seller’s stockholders are entitled to additional payments if the drug or drugs in development reach certain milestones, often culminating in FDA approval or commercialization. Achieving those milestones can take many
Sidley Austin Blog
Latest from Sidley Austin Blog - Page 2
Eye Doctor With Blind Spot Loses LLC Manager Position
Last month, the Delaware Court of Chancery upheld an amendment of a Limited Liability Company agreement through a merger even when it had recently struck down a similar amendment in the same LLC agreement. In Campus Eye Management Holdings, LLC v. E. Bruce DiDonato, OD, Vice Chancellor Will concluded that because the LLC agreement…
The Dog That Didn’t Bark: Court of Chancery Decision Reaffirms the Strength of the Demand Futility Standard
In July, in Vladimir Gusinsky Revocable Tr. v. Hayes, No. CV 2022‑1124‑MTZ (July 23, 2024), Vice Chancellor Zurn issued an opinion reiterating the high bar a plaintiff must overcome to excuse demand.
The post The Dog That Didn’t Bark: Court of Chancery Decision Reaffirms the Strength of the Demand Futility Standard appeared first on Enhanced
(Fear) the Reaper, LLC: Court of Chancery Clarifies LLC Governance Rights Upon Member Death
A recent decision from the Delaware Court of Chancery, Gurney-Goldman v. Goldman, C. A. 2023-1124-JTL (July 12, 2024), addressed a matter of first impression: What is the power of an estate’s executor to exercise an LLC member’s corporate governance rights after that member dies or becomes disabled? The case reveals a tension between the “pick…
In Case of First Impression, Court of Chancery Awards Expenditures Incurred in Third-Party Litigation as Breach of Contract Damages
On remand from the Delaware Supreme Court, the Court of Chancery has awarded XRI more than $6 million in litigation expenses and recoupment of fees advanced to a former LLC member who breached the governing LLC Agreement. XRI Inv. Holdings LLC v. Holifield, C.A. No. 2021-0619-JTL (July 24, 2024). The former LLC member, Gregory Holifield,…
Chancery, Affirmed: Delaware is ‘Contractarian,’ So Please Read The Fine Print
On July 5, 2024, the Delaware Supreme Court affirmed a Court of Chancery decision in REM OA Holdings, LLC v. N. Gold Holdings, LLC that serves as a warning for parties entering a contract or other binding document to diligently review each term of the agreement, including by proactively seeking out, reviewing, and analyzing any…
Chancery Court Reminds Bricklayers of Sturdy Foundation Required to Plead Demand Futility for Caremark Claims
Last month, in Bricklayers Pension Fund of Western Pennsylvania v. Brinkley, Delaware’s Court of Chancery dismissed a stockholder plaintiff’s derivative suit against the directors and officers of Centene Corporation for purported breaches of fiduciary duty in connection with their oversight of company compliance with Medicaid laws and regulations. The Court concluded that the plaintiff…
Strategic Questions to Consider as Business Courts Open in Texas
Texas’ new business courts are one month away from opening their doors on September 1. Over the last few weeks, Texas has been preparing for that day. Texas Governor Greg Abbott recently appointed the inaugural set of business court judges, and the Texas Supreme Court finalized the business court’s rules and filing fees. Companies that…
Purple Rain on Non-Managing LLC Members’ Parade
By Jon Muenz
Prince Rogers Nelson – better known by the mononym Prince, or for a time by a really cool symbol – was a world-famous musician, known for playing up to 27 instruments. He wrote dozens of hit songs: Purple Rain, When Doves Cry, Little Res Judicata, er, Red Corvette, the list goes on. But as discussed…
Look at the Big Picture: A Message to Boards Seeking Business Judgment Rule Protection
In City of Sarasota Firefighters’ Pension Fund v. Inovalon Holdings, Inc., the Delaware Supreme Court provided additional guidance on the contours of the MFW framework and its application – a timely reminder that stockholders (and courts) are looking at the big picture when assessing disclosures in the MFW context.
The post Look at the…