Nelson Mullins partners Edgar A. Neely IV and Scott N. Sherman wrote an article for Law360 offering insight into the recent Delaware Supreme Court decision to uphold Section 144 in Clearway Energy and what it means for boards navigating interested transactions under Delaware law.

“The Clearway Energy decision confirms that boards may utilize the new safe harbor framework when addressing potentially interested transactions,” they said. “The clarity provided by the DGCL amendments builds on previously established standards, making clear that only one of the two cleansing mechanisms of the Match Group decision is needed outside the going-private transaction context. And the plainly defined terms of the amendments give parties strong tools to assess whether a transaction can or did comply with the new Section 144.”

They also noted that, while Clearway Energy signals greater predictability in Delaware amid the ongoing "DExit" conversation, open questions remain and underscore the need for continued diligence in potentially interested transactions.

“Taken together, the DGCL amendments and the Supreme Court's decision may prove helpful to counteract the recent DExit movement — whose proponents have claimed a lack of predictability in Delaware courts,” they shared. “But the Clearway Energy decision did not address how courts should apply the new Section 144's criteria in all scenarios. In that regard, questions still remain, and boards should thus continue to exercise increased diligence with potentially interested transactions.”

Subscribers may read the article here.