Skadden Discusses When It Makes Sense to Prepay Appraisal Claims

In response to the growing practice of “appraisal arbitrage,” in 2016 Delaware’s General Assembly amended the state’s appraisal statute, Section 262 of the Delaware General Corporation Law. The amendment to Section 262(h) granted corporations the option to “prepay” appraisal claimants an amount of the corporation’s choosing in order to stop the accrual of interest. While corpora­tions now have the option to pay, should they? Whether, when and how much to prepay is a complex and nuanced judgment that will vary depending on the particular facts and circumstances of a case.

Background

Prior to the amendment, corporations in an appraisal action … Read more