[1] The court held that a Board's approval of an issuance and purchase of preferred stock was a valid exercise of its business judgment under Delaware law.

The latter was having financial difficulties and its directors approved an issuance of $20 million of preferred stock.

A company called BFC bought the stock in a deal that was negotiated by a Benihana director.

The appellate court applied Delaware law, which provided safe harbor for an interested transaction.

Ultimately, the appellate court found that because the directors spent significant time on the process of making their decision, and because the transaction was a fair deal that was approved by a majority of disinterested directors, it was covered by the business judgment rule.