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June 2 — The Delaware Chancery Court May 29 provided some guidance on when there is a sufficient basis to disqualify an appraiser.
In a letter opinion, Vice Chancellor John W. Noble refused to disqualify a court-selected appraiser because of the appraiser's relationship with one of the parties' counsel.
In doing so, he clarified when an alleged conflict is serious enough for ex ante disqualification.
In 2014, the court selected Valuation Research Corporation to value AM General Holdings LLC in a long-running dispute between The Renco Group Inc. and MacAndrew AMG Holdings LLC.
After Valuation disclosed that it had performed work for a client of MacAndrew's counsel, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Renco moved to disqualify the appraiser because of this relationship and MacAndrew's non-disclosure.
However, Noble found that the court should not interfere with Valuation's assessment of whether it should serve as an appraiser, once it had disclosed the possible conflict.
Although he noted that there may be cases where ex ante disqualification is appropriate, he concluded that disqualification was not warranted here because Valuation had neither failed to disclose its relationship with clients of Paul, Weiss nor engaged in any misconduct.
“It is hard to believe that major law firms and valuation firms, to whom clients turn for their broad experience and professionalism, would not have common clients. The conflicts test that Renco offered and the Court found reasonable in November 2014 continues to operate reasonably, and there is the safeguard of judicial review ex post,” he wrote.
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The opinion is available at http://www.bloomberglaw.com/public/document/AM_General_Holdings_LLC_v_The_Renco_Group_Inc_The_Renco_Group_Inc.
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