I. Executive Summary.
As the year 2020 was coming to a close, District Judge Rakoff issued a decision in In re Nine W. LBO Sec. Litig., No. 20 MD. 2941 (JSR), 2020 WL 7090277 (S.D.N.Y. Dec. 4, 2020) (“Nine West”) that sent some shockwaves through the M&A community with respect to the future of corporate governance in the context of director duties relating to the sale of a plainly solvent company.
As the second quarter of 2021 comes to a close, the implications and potential for far-reaching consequences of Judge Rakoff’s decision continues to draw fascinating intellectual debate amongst legal and financial advisors and corporate professionals alike, as reasonable minds differ as to whether Judge Rakoff’s decision also marked a new beginning—as with much else in 2020—for directors in their execution of applicable state-mandated duties. Indeed, the New York Times recently published an article [1] discussing Judge Rakoff’s decision and querying whether the private equity party that Wall Street has been embracing for years might be coming to an end as “[w]hat had for decades been considered a virtue—selling a company for a market-clearing price to the benefit of existing shareholders—might have become a vice.”
