Ryan v. Lyondell generated a whole lot of consternation in the blogosphere (some of which is collected here), but in my view, the commentary was largely overblown in this case, as Vice Chancellor Noble clarified today in his letter opinion denying an interlocutory appeal by the defendants. (See the letter opinion here and Francis Pileggi's helpful summary here.)

Of course, the defendants could have saved themselves the trouble if they had read my post on the initial opinion. My post on their memorandum in support of this motion of interlocutory appeal further showed why they were barking up the wrong tree, and Vice Chancellor Noble wrote as much in today's opinion, repeatedly emphasizing that his initial opinion did not eviscerate Section 102(b)(7), nor did it signal the revival of a "liability crisis" like the one that followed Smith v. Van Gorkom. (Of course, even that historical curiosity is more complicated than just that.) The court contrasted this case with Van Gorkom as follows:

The directors in this instance walked into a potential liability trap with their eyes wide open: they knew the Company was “in play,” they knew what the proper discharge of their fiduciary obligations in connection with a sale of control demanded, and yet they appear, on the limited record before the Court, to have done nothing to prepare for a possible sale.

That's the central point of the new opinion: on the summary judgment record, the defendants "did nothing (or virtually nothing)" to fulfill their Revlon duties. Thus, "the directors may have consciously disregarded their known fiduciary obligations in a sale scenario." In other words, the defendants may have acted in "bad faith." Thus, the court wants to see a more developed record. That is all.

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