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Special Committees/Director Independence

Board’s Choice of Financing over Bankruptcy Survives Revlon Review

In Binks v. DSL.net, Inc., the Delaware Chancery Court found that the defendant’s board acted consistent with its fiduciary duties under Revlon when, facing no other alternatives to bankruptcy, it approved a financing transaction that ultimately led to the sale of the company in a short form merger. The court found that the board acted in good faith, that a majority of its members were disinterested and that it was well-informed by an independent advisor.

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Delaware Court Provides Additional Guidance for Special Committees and their Advisors

May 31, 2006 | Posted by | Topic(s): Going Private, Special Committees/Director Independence, Advisories

Delaware’s Court of Chancery has issued another opinion offering guidance for special committees and their advisors in related-party transactions. In its May 18th opinion in Gesoff v. IIC Industries Inc., the court emphasized three points with respect to the use of special committees in an effort to shift the burden of proving entire fairness: composition of the committee, mandate of the committee and advisors to the committee.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/files/Publication/ce38126f-41b2-42a4-9b82-1d73b99a6c09/Presentation/PublicationAttachment/4a395289-e9d1-4933-8049-45606818639c/Gesoff%20Summary310506040306.pdf