Founded in 1932 as a Chicago-based pinball manufacturer, Bally’s diversified into everything from casinos and health clubs to amusement parks over the years before selling off its parts and fading into corporate obscurity in the new millennium.
Key Takeaways
Under Delaware law, following the acquisition of an entity through a cash-out or stock-for-stock merger, equityholders generally lose standing to pursue derivative claims in the name of the acquired entity unless certain limited exceptions apply.
In 2015, Delaware’s Chancery Court, in Primedia, established a three-part test for determining when former equityholders have standing to pursue post-merger direct claims for a controller’s alleged failure to secure the value of a material derivative claim during the merger negotiations.
Delaware’s Supreme Court has now, through
Spectra Energy, adopted the
Primedia test, but with two important clarifications:
Apart from making a threshold determination about plaintiff’s allegations, a trial court may not apply any further litigation risk discount in assigning value to the plaintiff’s claims on a motion to dismiss.