My friend, UCLAW colleague, coauthor, and office next door neighbor Iman Anabtawi has a post up at CLS' Blue Sky Blog discussing her new article on predatory management buyouts.
Even where the business judgment rule does not apply in the first instance because its preconditions are not satisfied, Delaware corporate law allows the use of ex ante procedural protections to avoid ex post substantive judicial review. D. Gordon Smith makes this point in “The Modern Business Judgment Rule,” which is forthcoming in the Research Handbook on Mergers and Acquisitions. In my forthcoming article, “Predatory Management Buyouts,” I analyze the related question whether the procedural mechanisms that, under Delaware law, boards may implement in order to “sanitize” the conflict-of-interest taint present in management buyout (MBO) transactions are adequate to achieve parity between transactions in which the business judgment rule attaches in the first instance and MBOs that invoke a procedural route back to the business judgment rule. The article raises a broader issue that I plan to address in future work whether, when we round-trip from the business judgment rule and back again via procedural mechanisms, we always end up in the same place.