Lyondell Chemical Co. v. Ryan

Last night, the Supreme Court of Delaware handed down its much anticipated decision in Lyondell Chemical Company v. Ryan, a case concerning whether the independent directors of a target company’s board were entitled to summary judgment on claims that they failed to act in good faith in conducting the sale of their company. In its decision, available here, the Court of Chancery had denied summary judgmnent in order to obtain a more complete record before determining whether the directors had acted in bad faith. The Supreme Court reversed that decision and remanded the matter for entry of judgment in favor of the Lyondell directors. In doing so, the Supreme Court emphasized the disinterested and independent nature of the directors, their awareness of the company’s value and prospects, and their consideration of the offer with assistance of financial and legal advisers. At most, the Court explained, “[the] record creates a triable issue of fact on the question of whether the directors exercised due care.” But there was no evidence, the Court said, “from which to infer that the directors knowingly ignored their responsibilities, thereby breaching their fiduciary duty of loyalty.”

The case is available here.