Page 10 - Delaware Lawyer - Winter 2020

FEATURE
Rolin P. Bissell
The Child Prodigy,
Corporation law star was born from the union of two divergent doctrines
The Delaware Supreme Court’s Kahn v. M&F Worldwide1 decision (“MFW”) will turn six years old this March. And just as the six-year-old Mozart mesmerized the courts of Europe with his musical talents, MFW has become a popular prodigy in the boardroom, dazzling transaction planners and directors with its alchemic power to convert an entire fairness standard case into a business judgment rule case.
8 DELAWARE LAWYER WINTER 2020
But like all wunderkinds, MFW is not exempt from going through the de- velopmental stages of childhood on
the path to maturity. So far, Delaware courts, acting as guardian, have provided MFW with the tutelage their ward needs to gain refinement and reach its full adult potential.
Long Courtship Leads to Historic Coupling of Standards
In understanding a child, perhaps it is best to start with the parents. The MFW doctrine is the offspring of the unlikely coupling of the business judgment rule and the entire fairness standard. The two standards of review have co-existed for years, but most thought they were fun- damentally incompatible and could never
be married. The board-friendly business judgment rule is easygoing and amiable, highly tolerant of directors’ faults. Absent evidence of disloyalty or bad faith, it has always stood ready to protect an indepen- dent and disinterested director who might need its help. The entire fairness doctrine is a sterner, austere character. Although it has been admired for its high moral as- pirations, its unremitting insistence on both fair process and fair price has made it an instant buzzkill for many a transac- tion planner. As a result, the entire fair- ness standard often has found itself sitting alone at the corporate party.
One party guest who for many years could not avoid the company of the en- tire fairness standard was the controlling
MFW Standard, Turns Six Years Old