• Chancery Declines To Dismiss Claims Against Non-Independent Directors Who Voted in Favor of Special Committee-Approved Spin-Off Transaction 

  04/23/2026
  On April 13, 2026, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery dismissed claims for breach of fiduciary duty asserted by minority stockholders against a special committee but declined to dismiss those asserted against non-independent directors and executives in connection with a multi-step spin-off transaction. Vladimir Fishel, et al. v. Liberty Media Corporation, et al., C. A. No. 2024-1057-KSJM (Del. Ch. Apr. 13, 2026). The Court held that, while plaintiffs failed to allege a reasonable inference that the special committee was so controlled that it acted in bad faith, all that was needed to sustain a claim for breach of fiduciary duty against the non-independent directors was “a showing that the conflicted directors voted in favor of the interested transaction.”
  
  In a September 2024 transaction, the controller company defendant (the “Controller”) executed a series of transactions that spun off certain assets from a media company (the “Company”), resulting in the creation of a new and independent company (“NewCo”) that held the spun assets. Through the spin, the Controller also eliminated certain tracking stock, which traded at a significant discount to the value of the spun assets. Plaintiffs alleged that this resulted in a multi-billion-dollar benefit to the Controller that was not enjoyed by the minority investors in the Company. Plaintiffs alleged that (i) the special committee directors lacked independence and failed to adequately negotiate on behalf of Company stockholders, and (ii) the non-committee directors (who were not independent) breached their fiduciary duties by approving the transactions.
  
  All defendants moved to dismiss for failure to state a claim, and the non-committee defendants also sought dismissal for lack of standing, asserting that certain aspects of the transaction were derivative Company claims and thus extinguished at closing. With respect to the non-committee defendants, the Court found that plaintiffs adequately pleaded a claim because, by voting for the spin-off, the defendants favored the Controller’s interests ahead of the Company’s. In so holding, the Court explained that voting in favor of a transaction “unquestionably advances” it and is often “the ultimate action needed to complete” it. The Court also rejected the standing argument, finding that plaintiffs’ claims were direct, not derivative.
  
  The Court granted the committee defendants’ motion. The Court observed that a “controlled mindset” claim is often shorthand for ineffective negotiations or “process failures,” and while the Court agreed that the process was not perfect, plaintiffs failed to plead the type of extreme failure sufficient to allege a claim for breach of the duty of loyalty. In so holding, the Court noted that the committee negotiated a tax sharing agreement and weighed the advantages and disadvantages of proposed transactions. The Court also concluded that, notwithstanding the Company’s alleged influence over the composition of the committee (by opposing a particular director’s membership), this alone did support the conclusion that the committee defendants acted disloyally. Accordingly, the Court dismissed the claims against the special committee defendants. 
  Categories: Controller Transactions, Fiduciary Duties
  

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• VLADIMIR FISHEL, ET AL. V. LIBERTY MEDIA CORPORATION, ET AL.