MONTH-IN-BRIEF (Jan 2023)
Garfield v. Boxed, Inc., C.A. No. 2022-0132-MTZ (Del. Ch. Dec. 27, 2022) (Zurn, V.C.)
Court of Chancery Awards Plaintiff Fees and Expenses Totaling $850,000 After Plaintiff Advised the Board of Directors of SPAC Boxed, Inc. that Two Stockholder Votes Required in Connection with a de-SPAC Transaction Violated Section 242(b) of the Delaware General Corporation Law
By Pamela L. Millard, Potter Anderson & Corroon LLP
In this memorandum opinion, the Court of Chancery held that plaintiff, who advised the board of directors of Boxed, Inc. (“Boxed” or the “Company”) that two stockholder votes secured in connection with a merger transaction failed to comply with Section 242(b) of the Delaware General Corporation Law (the “DGCL”), had conferred a corporate benefit upon the Company and was therefore awarded fees and expenses totaling $850,000.
The Company, a publicly traded Special Purpose Acquisition Vehicle (a “SPAC”), had Class A common stockholders and Class B common stockholders, with plaintiff holding shares of Class A common. Boxed planned to acquire another corporation in a merger, with the Company surviving post-merger. In addition to approving the merger transaction, the stockholders of Boxed were asked to approve certain amendments to the Company’s Certificate of Incorporation (the “Charter”), including (1) increasing the authorized number of Class A common stock (the “Share Increase Amendment”), and (2) altering the vote required for the board to change the number of authorized shares of the Company in the future (the “Voting Amendment” and, together with the Share Increase Amendment, the “Charter Amendments”).