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P. Clarkson Collins Jr. of Morris James. P. Clarkson Collins Jr. of Morris James.

The Delaware Supreme Court decision in Corwin and its progeny established a powerful defense to stockholder challenges of a corporate transaction: in the absence of a controlling stockholder that extracted personal benefits, disinterested stockholder approval of a transaction has the effect of providing review under the irrebuttable business judgement rule.  In Garfield v. BlackRock Mortgage Ventures, (Del. Ch. Dec. 20, 2019), the plaintiff asserted an entire fairness claim in connection with the reorganization of a mortgage services company that allegedly involved two stockholders forming a control group that exercised effective control over a Reorganization from which they benefited. At the pleading stage the Delaware Court of Chancery found the allegations of a control group sufficient to preclude a Corwin defense, even though there was no formal agreement between the stockholders or a full alignment of interests.

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