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Guilbeau v. Footprint Int’l Holdco, Inc., C.A. No. 2024-0968-JTL (Del. Ch. May 11, 2026)
By: Tyler O'Connell and Sarah Ennis
Early investors acquired Class A preferred stock and later challenged a cram-down financing, claiming it resulted from breaches of fiduciary duty. The defendants moved to dismiss under Rule 12(b)(6), and the Court granted in part and denied in part their motions. The Court held that, at the pleading stage, it was reasonable to infer that certain directors breached their fiduciary duties when they approved a company financing that was proposed and largely funded by three institutional investors that were among the company’s largest stockholders. The Court reasoned the board did not have a majority of disinterested and independent directors, and thus the entire fairness standard of review applied. The Court observed certain alleged aspects of the financing that may be suspect, including: the financing afforded the company a pre-money valuation of $500 million whereas other contemporaneous transactions indicated a value of $1 billion; the company essentially ignored other financing proposals it received; and it was not disclosed to stockholders that special benefits were granted to two large stockholders, the company valuation was depressed, and other proposals were received. Additionally, the Court also held that large investors who participated in the cram-down financing may have aided and abetted the directors’ breaches of fiduciary duty, as it could be inferred they knowingly participated through their designees on the Company’s board.
