Staring into the Void(able): Delaware Supreme Court Resolves Moelis

Litigation attorneys Martin Seidel, Allison Kernisky and Sarah Molinoff published an article for Delaware Business Court Insider analyzing the Delaware Supreme Court's decision in Moelis & Company v. West Palm Beach Firefighters' Pension Fund, which reversed a Delaware Court of Chancery ruling on the enforceability of certain stockholder agreement provisions and clarified how courts should review said provisions. The authors note that although the Delaware legislature had already mitigated the effects of the Court of Chancery decision by enacting Senate Bill (S.B.) 21, or Delaware General Corporation Law Section 122(18), in 2024, the Supreme Court's opinion definitively prevents further application of the Court of Chancery's ruling. The authors call out several key takeaways – a narrowed set of arrangements that are truly "void," facial challenges accrue at the execution of the agreement, and stockholder agreements can include governance-related consent, restriction and covenant provisions – before taking a deeper dive into the case background, Court of Chancery review and lawmakers' response. They additionally detail the Supreme Court's analysis, concluding that the Moelis decision, coupled with the passage of Section 122(18), should help alleviate concerns over the so-called "DExit" of corporations from the state.

READ: Staring into the Void(able): Delaware Supreme Court Resolves Moelis