Delaware Supreme Court Confirms Proxy Dissemination Starts Laches Clock For Disclosure Claims

On May 7, 2026, the Delaware Supreme Court affirmed the dismissal of stockholder claims challenging a de-SPAC transaction, holding that claims filed more than three years after the allegedly misleading proxy was disseminated were barred by laches.  The decision affirmatively establishes that disclosure-based claims accrue on the date that a proxy is disseminated—not the deadline for redemption or the date of the merger closing.  Reilly v. Horn, No. 426, 2025 (Del. May 7, 2026), aff’g 2025 WL 2781735 (Del. Ch. Sept. 30, 2025).

The case arose from a 2021 merger of a SPAC with a fitness and health company.  The proxy was issued on May 28, 2021; the vote to approve the transaction was held June 24, 2021, and the transaction closed the next day.  Plaintiff pursued a books-and-records investigation and filed suit on June 14, 2024, more than three years after the proxy was issued but less than three years from the date the transaction closed.  Plaintiff alleged that the sponsor and directors were conflicted and induced investors to approve the transaction by overstating the combined company’s value.  Plaintiff asserted that the claim accrued no later than the date of redemption for SPAC investors who chose not to buy into the merger; defendants asserted that the claim derived from an information injury and accrued when the allegedly misleading proxy was issued to holders.

The Court of Chancery ruled that the three-year statute of limitations applied by analogy and that laches barred the claims for breach of fiduciary duty and unjust enrichment, both of which were based on informational injury and accrued when the proxy was issued.  The Delaware Supreme Court affirmed that reasoning, underscoring that claims premised on informational injury accrue at the time the allegedly misleading information is disseminated.  Equally important, the Court of Chancery and the Delaware Supreme Court found that equitable tolling did not apply because the alleged disclosure defects were discernible from the proxy itself.  The trial court noted that, while a later books-and-records production may strengthen a plaintiff’s claim, it will not necessarily postpone laches where the core disclosure gaps were publicly knowable from the proxy.