North Valley Mall v. Longs Drug Stores etc.
At issue in this case is whether a court should alter contractual obligations in a corporate reorganization, when the corporation utilized the type of reorganization it used in order to avoid altering its contractual obligations. The type of reorganization used in this case was referred to as a reverse triangular merger. The usefulness of such a merger is to leave the target corporation intact as a subsidiary of the acquiring corporation where the target corporation has contracts or assets that are not easily assignable. The Court of Appeal concluded that where the form of reorganization was not chosen to disadvantage creditors or shareholders, it would not ignore the form of reorganization chosen by the corporation. View "North Valley Mall v. Longs Drug Stores etc." on Justia Law