In the Matter of Kenneth Cole Productions, Inc. Shareholder Litigation: New York Court of Appeals Adopts MFW Business Judgment Standard of Review for Squeeze-Out MergersSullivan & Cromwell LLP - May 9, 2016
In In the Matter of Kenneth Cole Productions, Inc. Shareholder Litigation, the New York Court of Appeals (Stein, J.) adopted the Delaware Supreme Court’s 2014 approach in Kahn v. M&F Worldwide Corp. (“MFW”), holding that business judgment is the standard of review for squeeze-out mergers with controlling stockholders so long as the MFW-established conditions exist—the transaction from the outset is subject to the approval of a well-functioning independent special committee empowered to select its advisors and reject the transaction and an informed, uncoerced vote of a majority of the minority shares. The Court of Appeals noted that the MFW standard serves as an attempt to achieve a balance between protecting minority shareholders and preventing frivolous litigation and unwarranted judicial interference in independent corporate decision-making.