The UK Supreme Court handed down its decision in BTI v Sequana on 5 October 2022, unanimously dismissing the appeal from the 2019 Court of Appeal decision and confirming how directors duties ought to be applied when a company is in the zone of insolvency. Although decisions of the UK Supreme Court are not binding upon the jurisdictions in which Ogier practises law, it will nevertheless be highly persuasive and influence the approach taken in the offshore jurisdictions that Ogier advises upon.
Legal claims can only be brought within the applicable limitation period prescribed by the Limitation Act (1996 Revision). A defendant to any claim that is time-barred has a complete defence. Prior to the recent decision ofRitchie Capital Management LLC et al (Ritchie) v Lancelot Investors Fund Ltd (Lancelot) and General Electric Company (GE), it had been generally understood that the Cayman approach to claims against companies in liquidation would follow the English position on the issue of limitation.
Business headlines have warned of a potential “chilling effect on buyouts” as a result of the decision recently issued by the U.S. District Court for the Southern District of New York in In re: Nine West LBO Securities Litigation (Dec. 4, 2020). Contrary to the views of some other commentators on the decision, we do not believe that the decision is likely to chill leveraged buyout activity, to upend how LBOs have been conducted, or to significantly increase the potential of liability for target company directors selling the company in an LBO.
The Coronavirus pandemic, while primarily a public health issue, is creating numerous legal concerns. We have identified some of the key issues and developments below. In addition, we have formed a task force comprised of partners and senior lawyers from across all practice groups and offices to track developments and provide timely guidance to clients on Coronavirus-related issues.
M&A
Avago Technologies Wireless (USA) Manufacturing Inc. acquired PLX Technologies, Inc. for $6.50 per share in cash. After the $300 million merger closed, certain former PLX stockholders sued for damages, alleging that the PLX directors had breached their fiduciary breaches, aided and abetted by both Potomac Capital Partners II, L.P. (a hedge fund that is an activist stockholder and had three designees on the PLX board) and the PLX board’s financial advisor (the “Banker”).