At the beginning of the COVID outbreak in the US, The Williams Companies adopted an unusually protective poison pill to thwart any activist campaigns that might arise in the then existing market conditions. Vice Chancellor McCormick struck down the pill in a decision published February 26. The Vice Chancellor’s decision is important in at least two regards.
Continue Reading Chancery Court Strikes Down The Williams Companies “Activist Pill”

In AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC et al., the Delaware Court of Chancery, held for the first time that reasonable measures aimed at combatting COVID-19 can violate the ordinary course of business covenant in a sale agreement if those measures “materially change [the] business or business practices” of the target company.  In connection with the attempted sale by AB Stable VIII LLC ( “Seller”) of a subsidiary holding 15 hotels to MAPS Hotel and Resorts One LLC ( “Buyer”), the Court held that by temporarily closing two hotels, limiting the capacity and amenities in others, and by furloughing and laying off workers in light of the COVID-19 pandemic, the Seller materially breached its covenant to operate in the ordinary course of business between the signing and closing of the transaction.  Accordingly, the Buyer was not required to complete the transaction.
Continue Reading Reasonable COVID-19 Preventative Measures Can Breach Ordinary Course of Business Covenant