On May 5, Vice Chancellor Morgan T. Zurn of the Delaware Court of Chancery granted B. Riley Financial’s motion to dismiss with prejudice of a proposed stockholder class action alleging breaches of fiduciary duty against B. Riley Financial in connection with its 2021 take-private acquisition of National Holdings Corp.
In a decision that offers significant guidance for large stockholders considering M&A transactions, the court ruled in Frank v. Mullen that B. Riley’s 46.4 percent pre-acquisition ownership of National stock did not amount to transaction-level control necessary to impose fiduciary duties under the Delaware Supreme Court’s ruling in Kahn v. M & F Worldwide Corporation. Vice Chancellor Zurn held that plaintiff failed to allege specific facts to establish that B. Riley exercised actual control over National or otherwise improperly influenced or commandeered the special committee considering the transaction.
The S&C team representing B. Riley included Adam Paris (who argued the motion) and Emily Olsen.