Appraisal Practice Tips 1 Year After Prepayment Amendment

By Berton Ashman Jr., Christopher Kelly and Mathew Golden (July 31, 2017, 10:44 AM EDT) -- Effective Aug. 1 of last year, Delaware's appraisal statute, Section 262 of the General Corporation Law of the State of Delaware (the DGCL), was amended in response to the recent rise of "appraisal arbitrage" to provide corporations acquired by merger or consolidation the option to prepay a sum of money to stockholders seeking appraisal and thereby limit the accrual of interest on the Court of Chancery's fair-value award. One year later, we review the impact of this amendment on appraisal litigation, offer practice considerations with respect to making prepayment, and question whether prepayment is counterproductive to the legislative purpose of the statutory amendment — discouraging appraisal arbitrage, or at least limiting its adverse effects — and detrimental to the acquisitive companies, financial sponsors and long-term stockholders who are the ultimate payers of the deal tax extracted by arbitrageurs. Further to the last of those topics, we propose a potential alternative to prepayment that, although untested, could be used by a respondent in an appraisal proceeding to argue that no interest should accrue on any fair-value award in favor of arbitrageurs. ...

Law360 is on it, so you are, too.

A Law360 subscription puts you at the center of fast-moving legal issues, trends and developments so you can act with speed and confidence. Over 200 articles are published daily across more than 60 topics, industries, practice areas and jurisdictions.

A Law360 subscription includes features such as

  • Daily newsletters
  • Expert analysis
  • Mobile app
  • Advanced search
  • Judge information
  • Real-time alerts
  • 450K+ searchable archived articles

And more!

Experience Law360 today with a free 7-day trial.

Start Free Trial

Already a subscriber? Click here to login

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!