M&A agreements routinely send disputes over earnouts and purchase-price adjustments to an independent accountant, and, as this blog has discussed before, the parties then fight over how much the accountant can decide. Earlier this year, in Fortis Advisors, LLC v. Stillfront Midco AB, 361 A.3d 43 (Del. 2026), the Delaware Supreme Court affirmed an order compelling a seller to bring its covenant and information-rights claims before an accountant that the merger agreement designated as an “Arbitrator.” See our coverage of that decision here.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robert S. Velevishttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobert S. Velevis2026-10-08 15:01:052026-10-08 15:01:05Still Experts After Stillfront: Two Chancery Decisions Confine Independent Accountants to Accounting Disputes
A July 1, 2026 order from the Delaware Court of Chancery provides another insight into the risks of using generative artificial intelligence (“GenAI”) without adequate human review, and highlights the court’s increased focus on organizational controls governing AI use. Although Leiske v. Kidd concerned litigation conduct and the duties of attorneys and law firms rather than directors’ fiduciary duties or corporate AI governance, the order suggests a growing judicial focus on not only individual misuse of AI, but also on the processes, controls, and oversight surrounding how AI is deployed within an organization. That focus reflects themes discussed in our May 2026 post, which examined SDNY’s inquiry into organizational questions arising from the use of ChatGPT in government decision-making.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2023/05/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_32.jpg606833Jaime A. Bartletthttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJaime A. Bartlett2026-09-24 11:15:282026-09-24 11:15:28How to Win and Still Lose: Delaware Court of Chancery’s Expanding Focus From Individual AI Misuse to Organizational Governance
You join a virtual meeting and a banner appears: The meeting is being transcribed by AI. You scan the attendees, glance at the agenda, and run a quick risk-benefit analysis. Who turned it on? Should I say something? Will someone else? Has everyone consented? Will the transcript be accurate and secure? And is there a risk if the AI transcript and the meeting minutes differ?
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00David A. Gordonhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngDavid A. Gordon2026-09-17 14:10:472026-09-17 14:11:42When the Meeting Minutes and the AI Transcript Don’t Match: Litigation Insights from Delaware Chancery
In Paragon Metals Holdings LLC v. Smith, No. 385, 2025 (Del. July 1, 2026), the Delaware Supreme Court held that a buyer could justifiably rely on representations in an acquisition agreement even though its due diligence failed to uncover information showing those representations were false. The decision confirms that a seller cannot avoid liability for knowingly false representations by arguing that better diligence by the buyer would have revealed the truth.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/11/MN-24015-Enhanced-Scrutiny-Blog-Imagery-Refresh_2.jpg606833Jim Ducayethttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJim Ducayet2026-09-15 09:04:072026-09-14 17:44:49Hiding the Ball Has Consequences: Delaware Supreme Court Reverses on Justifiable Reliance in M&A Fraud Claim
In Drakes Landing Associates, L.P. v. Tilden Park Capital Management, L.P. (Del. Ch. July 29, 2026), the Delaware Court of Chancery confronted an issue of first impression: how, if at all, the Revlon enhanced-scrutiny framework applies when the board of a public benefit corporation (“PBC”) navigates a change-of-control transaction. Revlon directs a board, in a sale-of-control scenario, to obtain the best price reasonably available for stockholders. However, under Section 365(a) of the Delaware General Corporation Law (“DGCL”), directors of a PBC are statutorily obligated to balance stockholders’ pecuniary interests against the interests of other stakeholders and the corporation’s stated public benefit when conducting corporate business.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Ian M. Rosshttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngIan M. Ross2026-09-08 14:44:052026-09-08 14:44:05Court of Chancery Confirms No Price-Maximization Duty on Public Benefit Corporation Directors
On August 26, 2026, the Court of Chancery issued Dodiya v. Franklin, C.A. No. 2025-0932-LWW (Del. Ch. Aug. 26, 2026), concluding that the “striking breakdown in corporate governance” detailed in the complaint made the “predictable path to safe harbor” under amended Section 144 of the Delaware General Corporation Law (DGCL) unavailable at the pleading stage. Dodiya’s message for boards is simple: the safe harbors deliver powerful protection, particularly by virtue of the presumption of disinterestedness afforded to directors determined to be independent for listing standard purposes, but only to boards that (i) run a process that is not grossly negligent and (ii) provide materially accurate disclosure to stockholders.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/05/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_32.jpg606833John H. Butlerhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJohn H. Butler2026-09-04 10:05:402026-09-04 10:05:40Strayed from the Path: Dodiya v. Franklin and the Emerging Rules of the DGCL’s Section 144 Safe Harbors
In Ayers v. Foley (available here), the Delaware Court of Chancery recently became the first court to interpret Section 144(d)(2) of the Delaware General Corporation Law (DGCL), the provision added by Senate Bill 21 (SB 21) in 2025 that affords a “heightened” presumption of disinterestedness to directors of listed companies whom the board has determined to be independent under stock exchange rules. Vice Chancellor Will held that the heightened presumption is not confined to Section 144’s safe harbors and applies with full force to the demand futility analysis under Court of Chancery Rule 23.1, and that overcoming it requires “substantial and particularized facts” of sufficient qualitative significance.
The decision illustrates the meaningful protections the amended statute now affords disinterested directors at the pleading stage, while confirming that directors who award compensation to themselves remain exposed to entire fairness review.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00James Heyworthhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJames Heyworth2026-08-26 09:05:572026-08-25 19:08:51Heightened Means Heightened: Chancery’s First Read of SB 21’s New Presumption Shuts Down Demand Futility
Still Experts After Stillfront: Two Chancery Decisions Confine Independent Accountants to Accounting Disputes
M&A agreements routinely send disputes over earnouts and purchase-price adjustments to an independent accountant, and, as this blog has discussed before, the parties then fight over how much the accountant can decide. Earlier this year, in Fortis Advisors, LLC v. Stillfront Midco AB, 361 A.3d 43 (Del. 2026), the Delaware Supreme Court affirmed an order compelling a seller to bring its covenant and information-rights claims before an accountant that the merger agreement designated as an “Arbitrator.” See our coverage of that decision here.
(more…)
Robert S. Velevis
Dallas
rvelevis@sidley.com
Chaddy Georges
San Francisco
cgeorges@sidley.com
How to Win and Still Lose: Delaware Court of Chancery’s Expanding Focus From Individual AI Misuse to Organizational Governance
A July 1, 2026 order from the Delaware Court of Chancery provides another insight into the risks of using generative artificial intelligence (“GenAI”) without adequate human review, and highlights the court’s increased focus on organizational controls governing AI use. Although Leiske v. Kidd concerned litigation conduct and the duties of attorneys and law firms rather than directors’ fiduciary duties or corporate AI governance, the order suggests a growing judicial focus on not only individual misuse of AI, but also on the processes, controls, and oversight surrounding how AI is deployed within an organization. That focus reflects themes discussed in our May 2026 post, which examined SDNY’s inquiry into organizational questions arising from the use of ChatGPT in government decision-making.
(more…)
Jaime A. Bartlett
San Francisco
jbartlett@sidley.com
Asher J. Zlotnik
New York
asher.zlotnik@sidley.com
When the Meeting Minutes and the AI Transcript Don’t Match: Litigation Insights from Delaware Chancery
You join a virtual meeting and a banner appears: The meeting is being transcribed by AI. You scan the attendees, glance at the agenda, and run a quick risk-benefit analysis. Who turned it on? Should I say something? Will someone else? Has everyone consented? Will the transcript be accurate and secure? And is there a risk if the AI transcript and the meeting minutes differ?
(more…)
David A. Gordon
Chicago
dgordon@sidley.com
Holly J. Gregory
New York
holly.gregory@sidley.com
Takayuki Ono
Chicago, Tokyo
tono@sidley.com
Matt S. Jackson
Chicago
matthew.jackson@sidley.com
Ryan E. Parker
Chicago
ryan.parker@sidley.com
Hiding the Ball Has Consequences: Delaware Supreme Court Reverses on Justifiable Reliance in M&A Fraud Claim
In Paragon Metals Holdings LLC v. Smith, No. 385, 2025 (Del. July 1, 2026), the Delaware Supreme Court held that a buyer could justifiably rely on representations in an acquisition agreement even though its due diligence failed to uncover information showing those representations were false. The decision confirms that a seller cannot avoid liability for knowingly false representations by arguing that better diligence by the buyer would have revealed the truth.
(more…)
Jim Ducayet
Chicago
jducayet@sidley.com
Deborah Sands
New York
dsands@sidley.com
Court of Chancery Confirms No Price-Maximization Duty on Public Benefit Corporation Directors
In Drakes Landing Associates, L.P. v. Tilden Park Capital Management, L.P. (Del. Ch. July 29, 2026), the Delaware Court of Chancery confronted an issue of first impression: how, if at all, the Revlon enhanced-scrutiny framework applies when the board of a public benefit corporation (“PBC”) navigates a change-of-control transaction. Revlon directs a board, in a sale-of-control scenario, to obtain the best price reasonably available for stockholders. However, under Section 365(a) of the Delaware General Corporation Law (“DGCL”), directors of a PBC are statutorily obligated to balance stockholders’ pecuniary interests against the interests of other stakeholders and the corporation’s stated public benefit when conducting corporate business.
(more…)
Ian M. Ross
Miami
iross@sidley.com
Vincent J. Margiotta
New York
vmargiotta@sidley.com
Strayed from the Path: Dodiya v. Franklin and the Emerging Rules of the DGCL’s Section 144 Safe Harbors
On August 26, 2026, the Court of Chancery issued Dodiya v. Franklin, C.A. No. 2025-0932-LWW (Del. Ch. Aug. 26, 2026), concluding that the “striking breakdown in corporate governance” detailed in the complaint made the “predictable path to safe harbor” under amended Section 144 of the Delaware General Corporation Law (DGCL) unavailable at the pleading stage. Dodiya’s message for boards is simple: the safe harbors deliver powerful protection, particularly by virtue of the presumption of disinterestedness afforded to directors determined to be independent for listing standard purposes, but only to boards that (i) run a process that is not grossly negligent and (ii) provide materially accurate disclosure to stockholders.
(more…)
John H. Butler
New York
john.butler@sidley.com
Adam Cromie
New York
adam.cromie@sidley.com
David Grubman
New York
david.grubman@sidley.com
Courtney Hauck
New York
courtney.hauck@sidley.com
Arthur E. Adler
New York
aadler@sidley.com
Heightened Means Heightened: Chancery’s First Read of SB 21’s New Presumption Shuts Down Demand Futility
In Ayers v. Foley (available here), the Delaware Court of Chancery recently became the first court to interpret Section 144(d)(2) of the Delaware General Corporation Law (DGCL), the provision added by Senate Bill 21 (SB 21) in 2025 that affords a “heightened” presumption of disinterestedness to directors of listed companies whom the board has determined to be independent under stock exchange rules. Vice Chancellor Will held that the heightened presumption is not confined to Section 144’s safe harbors and applies with full force to the demand futility analysis under Court of Chancery Rule 23.1, and that overcoming it requires “substantial and particularized facts” of sufficient qualitative significance.
The decision illustrates the meaningful protections the amended statute now affords disinterested directors at the pleading stage, while confirming that directors who award compensation to themselves remain exposed to entire fairness review.
(more…)
James Heyworth
New York
jheyworth@sidley.com
Susana Herrera
San Francisco
susana.herrera@sidley.com
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