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Weil Defeats Multi-Hundred Million Dollar Breach of Fiduciary Duty Action for Brookfield Asset Management

On June 9, 2023, Weil prevailed on behalf of Brookfield and certain of its affiliates in a Delaware Chancery Court stockholder class action arising out of the July 2020 acquisition of all of the outstanding common stock of TerraForm Power, Inc. not already owned by Brookfield and certain of its affiliates.  The complaint, which sought hundreds of millions of dollars in damages, asserted breach of fiduciary duty claims against the defendants and alleged that the 2020 Acquisition was procedurally and substantively unfair to TerraForm’s minority stockholders because, among other allegations, (i) the merger consideration did not adequately value allegedly material derivative claims that were extinguished as a result of the merger, and (ii) the Proxy filed with the U.S. Securities and Exchange Commission was allegedly materially misleading.  Weil moved to dismiss the complaint in its entirety, arguing, among other things, that the merger fully complied with the framework set forth in Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014). On June 9, the Delaware Chancery Court agreed and dismissed the complaint in full.

This is the second consecutive victory the Weil team has achieved for Brookfield and its affiliates in stockholder litigation arising out of the acquisition of TerraForm common stock. In September 2021, Weil won a once-in-a-generation interlocutory appeal before the Delaware Supreme Court that reversed Delaware’s oft-criticized 2006 precedent, Gentile v. Rossette.  The court’s unanimous opinion reversed a Delaware Court of Chancery order denying Brookfield’s motion to dismiss in a consolidated stockholder derivative and class action that challenged a June 2018 private placement in which Brookfield affiliates acquired $650 million of TerraForm Class A common stock, which increased Brookfield’s economic and voting interest in TerraForm from approximately 51% to approximately 65.3%.

The Weil team was led by John Neuwirth, Co-Head of Weil’s Securities Litigation practice, and included counsel Stefania Venezia, Amanda Pooler, and Elizabeth Sytsma, and associates Tanner Stanley, Austin Coe, Ben Apfel, Casey D’Alesandro and Chloe Fife.