Recently, in Witmer v. Armistice Capital, LLC, Delaware’s Court of Chancery dismissed a stockholder plaintiff’s derivative suit against Armistice Capital, LLC, a large investor in Aytu Biopharma, Inc., for, among other things, purported breaches of fiduciary duty and aiding and abetting fiduciary breaches, in connection with two transactions for which the plaintiff alleged Aytu overpaid, the investor improperly benefited, and the investor exercised control.

Our blog occasionally highlights developments in Delaware jurisprudence regarding alleged controller transactions (see, for example, our posts here and here).  It is important to note that, in March 2025, Section 144 of the Delaware General Corporation Law was amended to—among other things—create statutory definitions of “controlling stockholder” and “control group.”  See 8 Del. C. § 144.  It further provides that “[n]o person shall be deemed a controlling stockholder unless such person satisfies” this criteria (and provides similarly concerning a “control group”).  More broadly, Section 144 creates statutory safe harbors that, if satisfied, can eliminate the possibility of obtaining equitable relief or damages against fiduciaries for certain transactions (including controlling stockholder transactions).  But these amendments do not apply to litigation that was already pending on or before February 17, 2025.  Witmer (and this article) consequently address Delaware’s pre-amendment controlling stockholder jurisprudence.

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