Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, 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 Steinman, Maxwell Yim, and Hannah Reiner; and is part of the Delaware law series; links to other posts in the series are available here.
In Guilbeau v. Footprint (May 11, 2026), the Court of Chancery held, at the pleading stage of litigation, that it was reasonable to infer that certain directors of Footprint International Holdco, Inc., a non-controlled Delaware corporation (the “Company”), breached their fiduciary duties when they approved a Company financing (the “Financing”) that was proposed, and largely funded, by three institutional investors (the “Funds”) that were among the Company’s largest stockholders. The court also held that the Funds may have aided and abetted the directors’ breaches, acting through their designees on the Company’s board.
The Financing raised $500 million ($450 million of it from the Funds) through the issuance of a new class of preferred stock (the “Class F Stock”), at a time the Company was verging on insolvency. The Financing was recommended by a three-member special committee of independent directors (the “Committee”) and approved by the full ten-person board of directors (the “Board”) (which included one designee from each of the three Funds—collectively, the “Fund Designees). As would be typical in connection with this type of financing, the Company provided special benefits to the Funds and to two large stockholders (“ZenCap” and “Koch”) who had blocking rights.
