Thanks to Mack Sperling of the North Carolina Business Litigation Report, we have a very recent decision by a New York Court, applying Delaware law, holding that the business judgment rule was satisfied in the "fire sale" [my words] of Bear Stearns to JP Morgan. The decision, here, was submitted to the court in North Carolina (mentioned below) hearing the Wachovia/Wells Fargo litigation that involved similar issues.
Recall as noted here the decision of the Delaware Chancery Court a few months ago to stay the Delaware case involving the merger of Bear Stearns, and deferring to the pending related Bear Stearns case in a New York court in what was perhaps a sui generis procedural decision. Here’s how Mack Sperling introduces the New York court’s Bear Stearns opinion:
… the Bear Stearns board did not breach its fiduciary duty in its quick approval of the merger with JPMorgan and in agreeing to the deal protection provisions that it did, including selling 39.5% voting control to JPMorgan: "The financial catastrophe confronting Bear Stearns, and the economy generally, justified the inclusion of the various merger protection provisions intended to increase the certainty of the consummation of the transaction with JPMorgan." (slip op. at 32).
Also on Friday, December 5, 2008, as reported by Mack Sperling here, the North Carolina Business Court found that the business judgment rule supported the merger of Wachovia and Wells Fargo that was arranged in similarly unusual circumstances in light of the economic turmoil that in very short order saw some of the country’s largest financial institutions "go under" or need "bailouts".