Kallick v. Sandridge Energy, Inc.
A hedge fund, TPG-Axon, which held a stake in Sandridge Energy, launched a consent solicitation to destagger SandRidge's seven-member board by amending the company's bylaws, to remove all the directors, and to install its own slate. The incumbent board, whose members, along with SandRidge, were the defendants in this action, resisted the consent solicitation and campaigned to convince SandRidge's stockholders not to give consents to TPG. Relevant here was the incumbent board's warning that if the stockholders chose to elect a new board majority, the requirement in SandRidge's note indentures that SandRidge offer to repurchase its existing debt would be triggered and cause a material economic harm. The incumbent board faced this litigation from Plaintiff, a SandRidge stockholder who supported the TPG consent solicitation, arguing that the incumbent board was breaching its fiduciary duties by failing to approve the TPG slate. The Court of Chancery enjoined the incumbent board from soliciting consent revocations or impeding TPG's consent solicitation process in any way because the board lacked any rational, concluding that the incumbent board lacked any rational, good faith justification for its failure to approve the rival slate, and therefore, the equities weighed heavily in favor of the stockholders' right to make an uncoerced choice. View "Kallick v. Sandridge Energy, Inc." on Justia Law