Court Finds Up-C Reorganization Claim Derivative
On April 10, 2025, the Delaware Court of Chancery granted a motion to dismiss in a breach of fiduciary duty action arising from BGC’s conversion from an Up-C corporation to a traditional full C corporation. While multiple fiduciary duty cases involving Up-C reorganizations have been filed recently in the Delaware Court of Chancery, very few have been dismissed […]
Shannon Eagan, Patrick Gibbs, and Sarah Lightdale are Partners at Cooley LLP. This post is based on a Cooley memorandum by Ms. Eagan, Mr. Gibbs, Ms. Lightdale, and Bingxin Wu and is part of the Delaware law series; links to other posts in the series are available here.
On April 10, 2025, the Delaware Court of Chancery granted a motion to dismiss in a breach of fiduciary duty action arising from BGC’s conversion from an Up-C corporation to a traditional full C corporation. While multiple fiduciary duty cases involving Up-C reorganizations have been filed recently in the Delaware Court of Chancery, very few have been dismissed at the pleading stage. In dismissing the case, the court held that the plaintiff’s claim – which was styled as a direct, putative class action – was in fact derivative, and thus failed because the plaintiff neither made a demand nor attempted to plead demand futility.
