Can the Board approve a pre-closing lock-up provision without violating fiduciary duties?
The Board’s decision whether or not to enter a lock-up arrangement is subject to the Board’s business judgment. Courts generally approve of lock-ups that stimulate competition and achieve a fair price, but they disapprove of lock-ups that accomplish the opposite. Because the common intent behind an asset (or “crown jewel”) lock-up is to discourage other bidders, asset lock-ups have generally received negative treatment in the courts.
Related Questions
- Can the Board approve a sale without a price adjustment provision and/or a "collar" provision without violating fiduciary duties?
- Can the Board approve a pre-closing lock-up provision without violating fiduciary duties?
- Am I assisting a seller in violating his fiduciary duty to the bank(s) to pay the loan(s)?
