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Court says Medley Capital board breached fiduciary duties with Sierra deal

Medley Capital Corp. said the Court of Chancery of the State of Delaware issued a memorandum opinion on a class-action lawsuit filed over its planned merger into Sierra Income Corp.

The court ruled that Medley Capital's board breached their fiduciary duties in entering into the merger, but it rejected plaintiffs' claims that Sierra Income aided the directors in the matter. Medley Capital was ordered by the court to issue corrective disclosures and was barred from holding a shareholders' vote to approve the deal until the disclosures have been made and all shareholders have had the opportunity to read them.

In addition, the court denied the plaintiffs' request to permanently enjoin the proposed deal.

Medley Capital said it is considering all options concerning the memorandum opinion.