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Delaware Court of Chancery Refuses to Enforce Merger-Related Obligations Against Non-Consenting Stockholder

December 2, 2014 download PDF

In Cigna Health and Life Insurance Company v. Audax Health Solutions, Inc., the Delaware Court of Chancery (i) held that a broad release of claims found only in a letter of transmittal that a stockholder was required to execute to receive merger consideration was unenforceable for lack of consideration, and (ii) refused to enforce the portion of a post-closing indemnification obligation requiring direct payment from a non-consenting stockholder that was indefinite in duration and potentially required repayment of the stockholder's entire pro rata portion of the merger consideration.

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