The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Wed, 26 Aug 2026 13:15:03 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.10 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Delaware Court of Chancery Examines Fiduciary Duties of PBC Directors in a Change-of-Control Transaction For the First Time – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Delaware Court of Chancery Examines Fiduciary Duties of PBC Directors in a Change-of-Control Transaction For the First Time https://corpgov.law.harvard.edu/2026/08/25/delaware-court-of-chancery-examines-fiduciary-duties-of-pbc-directors-in-a-change-of-control-transaction-for-the-first-time/?utm_source=rss&utm_medium=rss&utm_campaign=delaware-court-of-chancery-examines-fiduciary-duties-of-pbc-directors-in-a-change-of-control-transaction-for-the-first-time https://corpgov.law.harvard.edu/2026/08/25/delaware-court-of-chancery-examines-fiduciary-duties-of-pbc-directors-in-a-change-of-control-transaction-for-the-first-time/#respond Tue, 25 Aug 2026 11:30:46 +0000 https://corpgov.law.harvard.edu/?p=183490?d=20260826091503EDT Posted by Susan H. Mac Cormac, Michael Santos, and Michael G. O’Bryan, Morrison & Foerster LLP, on Tuesday, August 25, 2026
Editor's Note:

Susan H. Mac Cormac, Michael Santos, and Michael G. O’Bryan are Partners at Morrison & Foerster LLP. This post is based on a MoFo memorandum by Ms. Mac Cormac, Mr. Santos, Mr. O’Bryan, Spencer Klein, Daniel Irvin, and Mariam Zahran, all at Morrison & Foerster LLP; and is part of the Delaware Law Series; links to other posts in the series are available here.

On July 29, 2026, the Delaware Court of Chancery dismissed with prejudice the stockholders’ complaint in Drakes Landing Associates, L.P. v. Tilden Park Capital Management, L.P.,[1] holding that the plaintiffs failed to rebut the statutory safe harbor for directors of a public benefit corporation (PBC). This is the first Delaware Chancery decision to address the balancing test of PBC director fiduciary duties in a change-of-control context.

The dispute arose out of a financing transaction at MPower Financing, PBC, a Delaware PBC (the “Company”), in which two of the Company’s largest lenders obtained control of the Company. The plaintiffs alleged that the special committee formed to evaluate the transaction, although independent and disinterested, nonetheless breached its fiduciary duties and that the lenders aided and abetted the breach. The Court found that the plaintiffs failed to plead facts sufficient to rebut the safe harbor protecting PBC directors under DGCL Section 365(b). The Court also addressed the applicability to PBCs of Revlon, concluding that the duty to maximize the sale price of a corporation does not apply to the conduct of PBC directors, but leaving open the question of whether a modified form of enhanced scrutiny might still apply as a standard of review.

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