Exiting Delaware: The TripAdvisor Decision
On February 4, 2025, the Delaware Supreme Court (the “Court”) overturned a prior ruling by the Delaware Court of Chancery, which subjected TripAdvisor Inc.’s (“TripAdvisor”) and Liberty TripAdvisor Holdings Inc.’s (“Liberty”) corporate conversions to Nevada to an entire fairness review. Instead, the Court determined that the business judgment rule was the appropriate standard of review, […]
Anna T. Pinedo is a Partner at Mayer Brown LLP. This post is based on her Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
On February 4, 2025, the Delaware Supreme Court (the “Court”) overturned a prior ruling by the Delaware Court of Chancery, which subjected TripAdvisor Inc.’s (“TripAdvisor”) and Liberty TripAdvisor Holdings Inc.’s (“Liberty”) corporate conversions to Nevada to an entire fairness review. Instead, the Court determined that the business judgment rule was the appropriate standard of review, as no board member—alleged controller included—received a material non-ratable benefit from the conversions.
A key aspect of the decision was the Court’s rejection of the Chancery Court’s view on the significance of “temporality” in assessing whether an alleged non-ratable benefit, such as reduced litigation exposure, was material. After an extensive analysis of Delaware precedent, the Court emphasized that temporality plays a critical role in determining materiality. Since no existing or imminent litigation claims were identified as being impacted by the conversions, the Court concluded that the alleged benefit was too speculative to be deemed material. The Court also highlighted that the board made its decision to reincorporate on a “clear day,” without the shadow of pending legal threats.
