Gallagher
MONTH-IN-BRIEF (Aug 2026)
Delaware Court of Chancery Imposes Constructive Trust over Founder’s Shares After Attempted Squeeze Out of Cofounder and Shifts Attorneys’ Fees
By Lisa R. Stark, Hirschler Fleischer
In Ramadurgam v. Destiny XYZ Inc., C.A. No. 2024-0057-PAF (Del. Ch. July 23, 2026), the Delaware Court of Chancery found that a founder and controller of Destiny XYZ Inc., a Delaware corporation (“Destiny”), which operates the now-NYSE-listed company Destiny Tech100, breached his fiduciary duties by squeezing out his minority cofounder at an unfair price and as part of an unfair process through a reverse-forward stock split. To accomplish the ouster of his cofounder, the controlling founder appointed two “henchmen” to Destiny’s board of directors, had his lawyers hire an investment banker to secretly value Destiny, and convened a special board meeting by Zoom to approve the reverse-forward split. The controller held the Zoom meeting with cameras off and shared the investment banker’s valuation report by Zoom chat before hastily approving the cash-out price of the minority founder’s shares.