This Week in Chancery Court: Senate Hearing, Santander Deal

The Delaware Senate convenes a special session Monday to consider judicial nominations, including Gov. John Carney’s pick for filling an upcoming vacancy on the Chancery Court’s main bench. Carney (D) nominated Bonnie W. David, currently serving as a Magistrate in Chancery, to replace retiring Vice Chancellor Sam Glasscock III.

Here’s a look at what’s happening in the Chancery Court itself this week:

Monday: Leo Inv. Hong Kong Ltd. v. Tomales Bay Cap Andurill III LP, Del. Ch., No. 2022-0175, trial 12/16/24.

At issue: A lawsuit over a failed SpaceX investment venture goes to trial, about a year and a half after the court held that breach of contract allegations against the party that ended the partnership were reasonable. The case involves a joint venture formed by Leo Investments Hong Kong Ltd. and Tomales Bay Capital LLC to buy a piece of Elon Musk’s private space flight company, which isn’t named as a party in the litigation. Leo alleges that Tomales terminated the deal less than a week after signing it. Vice Chancellor J. Travis Laster narrowed the claims in a Nov. 4 order granting partial summary judgment.

Court action: Laster will preside over a three-day trial in Wilmington, Del.

Failed SpaceX Investment Deal Lawsuit Gets Go-Ahead in Delaware

Tuesday: Option3 Cyber Inv. LLC v. Rogers, Del. Ch., No. 2023-0031, oral arguments 12/17/24.

At issue: A January 2023 lawsuit claimed the founder of cybersecurity company Centripetal Networks Inc. restructured the company through a “sham merger” with another affiliate while keeping a major investor in the dark about important details in the deal. Centripetal founder Steven Rogers and his son Jonathan, who allegedly formed part of the same control bloc, have filed a partial motion to dismiss the amended complaint.

Court action: Oral arguments on the partial motion to dismiss will be heard in Wilmington, Del.

Centripetal Networks Restructuring Draws Private Equity Lawsuit

Tuesday: In re Santander Consumer USA Holdings Inc. S’holders Litig., Del. Ch., No. 2022-0689, settlement hearing 12/17/24.

At issue: Vice Chancellor Lori W. Will must approve Banco Santander SA’s plans to pay $162.5 million to settle litigation led by Elliott Investment Management LP challenging the Spanish bank’s $12.7 billion buyout of its US auto loan division. The class-action filed in August 2022 alleged the buyout was rigged to keep pandemic-related profits in the bank’s hands. Shortly before trial was scheduled to begin Sept. 16, Elliott said it had discovered the destruction of evidence in Signal messages sent around the time of the deal. Santander said its executives used Signal, which includes auto-deletion features, on the advice of its cybersecurity team instead of less secure text messaging platforms. Elliott’s attorneys seek a $26.6 million fee award, including reimbursement of $3.8 million in expenses “that Elliott outlaid directly” and a $1.625 million incentive award for the hedge fund.

Court action: A settlement hearing will be held in Wilmington, Del.

Santander Pays $163 Million to End Elliott-Led Buyout Challenge

Thursday: S’holder Rep. Servs. LLC v. Signify Health Inc., Del. Ch., No. 2023-0076, bench ruling 12/19/24.

At issue: Signify Health Inc. faces claims it rushed to integrate a $250 million purchase, Caravan Health Inc., to avoid making $50 million in additional post-deal payments. Vice Chancellor Nathan A. Cook is scheduled to deliver a bench ruling on Signify’s motion to dismiss the lawsuit, which it said in a brief portrayed a “distorted” interpretation of the merger agreement. Cook heard oral arguments on the motion in July. Ex-Caravan investors have argued that Signify agreed to wait to consolidate Caravan’s workforce and divert employees, among other actions that “Caravan knew would negatively impact its ability to achieve the earn-out payment,” according a brief.

Court action: Cook will deliver his bench ruling by phone.

Signify Health Faces $50 Million Suit Over $250 Million Deal (1)