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The Plaintiffs’ complaint averred that the General Partner, its Board of Directors, and Vanguard (collectively, the “Defendants”) breached their contractual duties to the Plaintiffs, and the implied contractual covenant of good faith and fair dealing, by proposing, approving and consummating the Merger, which was not fair or reasonable and was made in bad faith. The plaintiffs, representing a class of the Partnership’s former unaffiliated common unitholders (the “Plaintiffs”), argued that the Conflicts Committee’s Special Approval was defective under the terms of the Partnership Agreement and that the Merger reflected an unfair exchange.
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Because the then prospective Merger posed a potential conflict of interest, the General Partner sought and received “Special Approval” from its “Conflicts Committee” (comprised of three independent directors on its board), as prescribed in the Partnership’s limited partnership agreement (the “Partnership Agreement”), before approving the Merger. Vanguard’s indirect subsidiary, however, was the Partnership’s general partner (the “General Partner”). Vanguard Natural Resources, LLC (“Vanguard”) acquired all of the outstanding common units of the Partnership in a unit-for-unit exchange (the “Merger”). The master limited partnership at issue was Encore Energy Partners LP, a Delaware limited partnership (the “Partnership”). In this memorandum opinion, the Delaware Court of Chancery dismissed claims for breach of duty and breach of the implied contractual covenant of good faith and fair dealing brought by former unaffiliated unitholders of a Delaware master limited partnership against the limited partnership’s general partner and its directors and parent in connection with an interested merger. Restructuring, Bankruptcy & Creditors' Rights.Intellectual Property Counseling, Patent & Trademark Procurement.Employee Benefits & Executive Compensation.Cybersecurity, Data Privacy and Information Governance.Alternative Entities and Structured Finance.