Chancery Finds Potential Liability for Blocking Company Financings Despite Contractual Veto Rights

Mon, 20 Jul 2026 11:30:39 +0000

Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on Monday, July 20, 2026

Editor's Note:

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner and a Co-Head of the M&A and Private Equity Practice, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven J. Steinman, Randi Lally, and Colum J. Weiden, and is part of the Delaware Law Series; links to other posts in the series are available here.

In Zync v. Porsche et al (May 29, 2026), the Delaware Court of Chancery, at the pleading stage of litigation, declined to dismiss claims against Porsche, a 5% stockholder in Zync, Inc. (the “Company”), and Porsche’s designee on the Company’s board of directors (the “Porsche Director”), relating to their blocking the Company’s critically needed financings, although Porsche had a contractual veto right over the financings. Allegedly, Porsche’s Director, whose approval was required for the financings, refused to act without Porsche’s prior approval; Porsche delayed providing, or refused to provide, approval for the financings; and, as a result, the Company was unable to secure funding and had to shut down.

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The Harvard Law School Forum on Corporate Governance

Chancery Finds Potential Liability for Blocking Company Financings Despite Contractual Veto Rights