MONTH-IN-BRIEF (Mar 2021)
Contractual Standard of Review Satisfied
By Michael Maxwell
In Dieckman v. Regency GP LP et al., 2021 WL 537325 (Del. Ch. Feb. 15, 2021), the Delaware Court of Chancery resolved a longstanding dispute involving Regency Energy Partners LP (the “Partnership”) and its general partner (the “General Partner”) with certain of the Partnership’s unitholders (“Plaintiffs”) for claims of breaches of the Partnership's limited partnership agreement (the “LPA”) in connection with a merger pursuant to which Energy Transfer Partners L.P. (“ETP”) acquired the Partnership (the “Merger”). At the time of the Merger, ETP and the General Partner, were under common control. In prior decisions it was found that the approvals of the Merger by a conflicts committee and a majority of unaffiliated unitholders did not satisfy the “safe harbors” under the conflict provision of the LPA because the conflicts committee was not properly constituted and the unaffiliated unitholders relied on a proxy statement that contained inadequate disclosures. Although the safe harbors approval mechanisms of the LPA did not apply, the conflict provision also contained “standards of review” that provided that, among other things, a conflict of interest would not be a breach of the LPA or of any duty if such conflict of interest was fair and reasonable to the Partnership.