Samvit Ramadurgam v. Destiny XYZ Inc.

majority opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SAMVIT RAMADURGAM, )

)

Plaintiff, )

)

v. ) C.A. No. 2024-0057-PAF

)

DESTINY XYZ INC., SOHAIL )

PRASAD, ARCHIT KUMAR, and )

CARLOS LICONA, )

)

Defendants. )

POST-TRIAL MEMORANDUM OPINION

Date Submitted: January 22, 2026

Date Decided: July 23, 2026

S. Michael Sirkin, R. Garrett Rice, ROSS, ARONSTAM & MORITZ LLP,

Wilmington, Delaware; Christopher D. Belelieu, H. Chase Weidner, GIBSON, DUNN & CRUTCHER LLP, New York, New York; Attorneys for Plaintiff Samvit Ramadurgam

Andrew S. Dupre, Brian R. Lemon, AKERMAN LLP, Wilmington, Delaware;

Attorneys for Defendants Destiny XYZ Inc., Sohail Prasad, Archit Kumar, and Carlos Licona

FIORAVANTI, Vice Chancellor

Two founders of a Delaware corporation built a business designed to provide

public market access to private technology companies. One co-founder held control.

The other held a substantial minority equity interest and served as a director. Their

relationship deteriorated after the controller sought additional equity and the

minority stockholder, whose approval was required, proposed governance

protections, such as adding independent directors.

The controller decided to cash out his co-founder through a clandestine

scheme. Unbeknownst to the co-founder, the controller hired a law firm that

commissioned a valuation of the company and then, with that valuation in hand,

appointed two friends to the board and rammed through a reverse-forward stock split

at a special meeting at which the controller and his devoted loyalists did not even

attempt to justify their faithless conduct.

The plaintiff has brought this action, asserting claims for breach of the duty

of loyalty against the controller and the two new directors for approving the cashout, and a claim for violation of 8 Del. C. § 155 against the company for failing to

pay fair value for the cashed-out fractional interests.

There is no dispute that the fiduciary duty claims are subject to the entire

fairness standard of review, requiring the defendants to prove fair process and fair

price. The controller concedes that he, with advice of counsel, did not care about

the process. Instead, he and the two directors he recruited to approve the transaction have embarked on a high-stakes trial strategy. They concede that the process was

not fair, but they contend that there is no liability because the price paid for fractional

interests in the reverse stock split was entirely fair.

This post-trial decision concludes that the defendants failed to carry their

burden of proving entire fairness. Neither the process nor the price was fair. The

transaction was initiated, timed, structured, and approved under the control of the

fiduciary who benefited from it. The newly appointed directors who approved the

transaction made no inquiry and merely rubber-stamped it at the behest of the

controller. The valuation evidence on which the defendants relied does not prove

that the consideration paid fell within a range of fairness. The conflicted controller

breached his duty of loyalty, and the other two directors who approved the

transaction breached their fiduciary duties by consciously disregarding their

responsibilities and acting in bad faith.

To remedy these breaches, the plaintiff seeks a restitutionary remedy that

returns the plaintiff and the controller to their respective proportionate equity

positions prior to the defendants’ disloyal conduct. The court, in the exercise of its

broad equitable powers to fashion appropriate relief, agrees that a restitutionary

remedy is appropriate. In addition, the court finds that the individual defendants’

egregious pre-litigation conduct warrants fee-shifting under the bad faith exception

to the American Rule.

I. BACKGROUND

These are the facts as the court finds them after trial.1

A. The Parties and the Destiny Entities

Destiny XYZ Inc. (“Destiny” or the “Company”), originally known as

Manifest Destiny Inc., during the events giving rise to this action, was a Delaware

corporation with its principal place of business in Austin, Texas. 2 Destiny is an

Other factual findings are contained in the analysis of the claims. Deposition testimony is cited as “(Surname) Dep.”; trial exhibits are cited as “JX”; stipulated facts in the pretrial order are cited as “PTO”; and references to the docket are cited as “Dkt.,” with each followed by the docket number and the relevant section, page, paragraph, or exhibit. Citations to testimony presented at trial are in the form “Tr. # (X),” with “X” representing the name or surname of the speaker. Citations to JX 280, the recording of the special meeting held on November 9, 2023, are in the form of “Special Meeting # (X),” and citations to JX 281, the transcript of the special meeting held on November 9, 2023, are in the form “Special Meeting Tr. # (X),” with “X” representing the surname of the speaker. Citations to the transcript of post-trial oral argument (Dkt. 102) are in the form of “PostTrial Arg.” Unless otherwise indicated, citations to the parties’ briefs are to post-trial briefs. When resolving factual disputes, this decision generally gives more weight to contemporaneous evidence. See Lynch v. Gonzalez, 2020 WL 4381604, at *5 (Del. Ch. July 31, 2020) (“The relative weight given to any particular piece of evidence, and particularly witness testimony, is a matter for the court to determine as the trier of fact.” (citation modified)), aff’d, 253 A.3d 556 (Del. 2021) (TABLE); see, e.g., BCIM Strategic Value Master Fund, LP v. HFF, Inc., 2022 WL 304840, at *2 (Del. Ch. Feb. 2, 2022) (“The witness testimony often conflicted with the contemporaneous record. In resolving factual disputes, this decision generally has given greater weight to the contemporaneous documents.”).

PTO ¶ 14. Destiny had three classes of common stock: Class A Common Stock, Class B Common Stock, and Class C Common Stock. JX 17 § 4.1.1; JX 57 § 4.1.1; JX 363 § 3. The classes had the same economic rights, but different voting powers. See JX 17 § 4.1.2‒ 3; JX 57 § 4.1.2‒3. Class A and Class B shares carried one vote per share. JX 17 § 4.1.3.1; JX 57 § 4.1.3.1. Class C shares carried 20 votes per share. JX 17 § 4.1.3.1; JX 57 § 4.1.3.1. Class B and Class C shares were convertible into Class A shares at the holder’s option. JX 17 § 4.1.4; JX 57 § 4.1.4. As of September 30, 2023, Destiny had 15,470,544 shares

investment management company that offers the public access to private markets

through the creation of exchange-traded portfolios and products. 3 Effective

December 8, 2025, Destiny converted into a Delaware limited liability company.4

Unless otherwise noted, this decision refers to Destiny as a corporation.

Samvit Ramadurgam (“Plaintiff”) and Defendant Sohail Prasad are cofounders of the Company, Destiny Advisors LLC (“Advisors”), and Destiny

Tech100 Inc. (“Tech100”).5 Initially, Ramadurgam and Prasad were co-Chief

Executive Officers (“CEO”), co-Presidents, and co-Chairmen of the Company’s

board of directors (the “Board”). 6 Prasad is currently the Company’s CEO,

Chairman, and controller. 7

Archit Kumar and Carlos Licona (together with Prasad, the “Individual

Defendants,” and together with Prasad and Destiny, the “Defendants”) were

outstanding: 5,880,544 Class A shares, 6,850,000 Class B shares, and 2,740,000 Class C shares. JX 225 Tab “Summary.” On a fully diluted basis, Class A represented 39.7% of the shares and 9.29% of the voting power; Class B represented 43.07% of the shares and 10.08% of the voting power; and Class C represented 17.23% of the shares and 80.63% of the voting power. See JX 225.

See JX 317 at 1.

See Dkt. 92; Defs.’ Answering Br. 38.

PTO ¶ 13.

Id. ¶ 29.

Id. ¶ 17.

appointed to the Board on November 6, 2023, just three days before voting to

approve the reverse-forward stock split.8

Tech100, a Maryland corporation, is a publicly traded closed-end

management investment company registered under the Investment Company Act of

1940 and holds investments in venture-backed private technology companies. 9

Advisors is a limited liability company wholly owned by Destiny.10 Advisors

provides investment advisory services to Tech100. Destiny is Advisors’ Managing

Member. 11

B. The Co-Founders’ Early Days

Ramadurgam and Prasad met in 2012 when they were teenagers participating

in a startup incubator program called Y Combinator.12 They became close friends

Id. ¶¶ 18−19.

JX 307 (“Prospectus”) at 1, 5, 13, 17‒21, 78; JX 374 ¶ 24; JX 310 at 4. 10

Prospectus at 5.

PTO ¶ 15.

See Tr. 4:16‒5:3, 5:16‒20, 6:5‒11 (Ramadurgam); Prasad Dep. 54:11‒15.

and later business partners. 13 Their first venture together focused on privatecompany secondary markets. 14

Ramadurgam and Prasad saw that equity in successful private technology

companies was difficult to access and difficult to trade. 15 Employees and early

investors often held illiquid positions.16 Meanwhile, outside investors wanted

exposure to pre-IPO companies but lacked an efficient way to obtain it.17 That

market gap inspired Ramadurgam, Prasad, and two others to form Equidate Inc. in

2014, which later became Forge Global, Inc. (“Forge”). 18 Forge built infrastructure

products for private technology companies and operated a trading platform through

which institutional and accredited investors could buy and sell shares of private

Tr. 7:11‒13 (Ramadurgam); id. at 495:6‒10 (Prasad).

Id. at 6:16‒24 (Ramadurgam). Prasad had begun angel investing and had reached the point where he was interested in investing in later-stage companies. He soon realized that the process was not easy. Months would pass from the time he first tried to make the investment to the moment he could finally purchase the stock. Prasad also saw complexity related to the involvement of legal professionals. Id. at 453:23‒455:5 (Prasad). 15

Id. at 7:1‒3 (Ramadurgam); id. at 455:6‒9, 455:20‒456:6 (Prasad).

See id. at 455:10‒19 (Prasad).

Id. at 7:3‒5 (Ramadurgam); id. at 456:16‒457:8 (Prasad).

PTO ¶ 13; Tr. 6:16‒7:10 (Ramadurgam).

companies, and specifically late-stage private companies valued at over a billion

dollars, known as unicorns.19

C. Destiny

While at Forge, Ramadurgam and Prasad considered creating a new assetmanagement division. The idea was to satisfy retail investors’ demand for Forgemanaged funds that would invest in pre-IPO assets, providing diversified exposure

without requiring investors to select individual companies or entry prices.20 But

Forge remained focused on institutional investors, making the asset-management

opportunity unsuited for Forge’s business. 21

Ramadurgam and Prasad left Forge and co-founded Destiny in 2019.22

Ramadurgam had prepared a creative brief describing the new company’s goals,

mission, and target audience. The brief referred to technology as a source of

innovation that begins in the private company ecosystem and stated that “the future

Tr. 5:8‒10 (Ramadurgam). See Robert P. Bartlett, A Founders’ Guide to Unicorn Creation: How Liquidation Preferences in M&A Transactions Affect Start-Up Valuation, in Research Handbook on Mergers and Acquisitions 123, 123 (Claire A. Hill & Steven Davidoff Solomon, eds., 2016). Forge completed an initial public offering (“IPO”) in a $2 billion SPAC deal on March 22, 2022. Tr. 5:10‒11 (Ramadurgam). Forge trades on the New York Stock Exchange (“NYSE”) under the ticker “FRGE.” PTO ¶ 13.

Tr. 7:14‒20, 7:24‒8:8, 11:9‒24 (Ramadurgam).

Id. at 8:7‒17, 11:3‒8.

Id. at 5:12‒13.

belongs to those who are choosing to manifest their dreams into reality.”23 That

exercise led Ramadurgam to the name “Destiny XYZ Inc.” 24 Destiny was

incorporated on November 1, 2019.25 At Destiny’s founding, Ramadurgam and

Prasad held equal shares of the Company, and each held the titles of co-CEO and

co-President. 26 Ramadurgam also served as Treasurer.27 The co-founders agreed to

a five-member board, with each of them holding the title of co-Chairman; the other

three seats were vacant.28

At the beginning of 2020, Destiny prepared an investment memorandum for

its seed round. The memorandum stated that “[a]nalogous to BlackRock in the

public markets, Destiny provides investors access to the private tech industry

through a family of publicly listed, liquid, ETFs.”29 It explained that Destiny sought

Id. at 9:18‒10:1, 10:3‒10. From the beginning, the idea was to form publicly traded vehicles that would offer investors liquidity and diversified access to otherwise illiquid and inaccessible assets, “enabling everyone to own their own piece of the future.” Id. at 12:17‒ 13:11; JX 34 at 4.

Tr. 9:14‒17, 10:1‒2, 10:11‒20 (Ramadurgam); id. at 481:15‒16 (Prasad). 25

PTO ¶ 14.

Id. ¶ 29.

Tr. 20:4‒9 (Ramadurgam).

Id. at 193:21‒194:1.

JX 18 at 4. Destiny’s thesis is to leverage public market infrastructure to provide access to private-company assets, capitalizing on the premium that public investors are willing to pay. Tr. 104:6‒15 (Ramadurgam); id. at 608:10‒13 (Prasad).

to create a family of ETFs with thematic motifs.30 In 2020, Destiny raised

approximately $5 million in Simple Agreements for Future Equity (“SAFEs”) with

a $25 million valuation cap.31 The SAFEs provided startup capital to Destiny and

gave holders the potential upside of an equity interest.

Destiny’s business thesis depends, in part, on public investors’ willingness to

pay a premium over net asset value (“NAV”) for access to private company assets.

By raising capital while trading at a premium to NAV, Destiny can acquire pre-IPO

assets at lower prices and grow the business.32 Long-term, the business model

contemplated growth through the formation of additional funds, the accumulation of

additional assets in each fund, and the appreciation of fund assets. 33 Prasad believed

JX 18 at 7 (listing, among others, ETFs with a focus on healthcare, fintech, artificial intelligence, Latin America, and India); Tr. 13:12‒14, 14:1‒12 (Ramadurgam). Destiny’s mission also carried a broader social goal to “break the pervasive class divisions and inequality that prevent those who are not Silicon Valley titans from participating in the growth and success of the private tech companies that are shaping our collective future.” JX 317 at 1‒2.

JX 19.

JX 37 at 7; Tr. 102:20‒103:12, 104:6‒105:21 (Ramadurgam); id. at 608:14‒17 (Prasad); see id. at 607:6‒608:7 (elaborating on the different components of the strategy). The assumption was always that Destiny’s fund would trade at a premium to NAV. Tr. 100:21‒ 104:5 (Ramadurgam); see also JX 35; JX 499; Tr. 612:4‒615:3 (Prasad) (describing JX 499 as a “napkin” model shared with investors, which did not contemplate the possibility that Destiny’s tech fund could trade at a discount to NAV).

Tr. 13:12‒20 (Ramadurgam).

that “Destiny has the opportunity to build a massively valuable business over

time.” 34

In the second half of 2020, however, the founders’ views about Destiny’s

direction diverged.35 The disagreement prompted a broader discussion about the cofounders’ respective roles at Destiny.36 Ramadurgam made clear that he would not

leave Destiny, but he was willing to reduce his day-to-day responsibilities. 37 The

result was an October 14, 2020, governance and capital reorganization. Prasad

became Destiny’s sole CEO and President, and his equity stake increased to

approximately 63.5%. 38 Ramadurgam retained approximately 36.5% of Destiny’s

equity and remained a director and co-Chairman. 39

The reorganization occurred as Destiny prepared to launch its first fund

product, Tech100. Tech100 was incorporated in Maryland on November 18, 2020.40

Prasad and Ramadurgam were the first directors on Tech100’s board. 41 Tech100

Id. at 694:6‒10 (Prasad).

Id. at 20:10‒22:13 (Ramadurgam).

JX 21; JX 24; Tr. 494:20‒23, 497:13‒16 (Prasad).

Tr. 24:2‒17, 24:20‒25:7 (Ramadurgam); JX 21 at 1 (“In no situation I can think of, am I open to ‘leaving’ [D]estiny.”); Tr. 497:8‒12 (Prasad).

PTO ¶ 30; JX 28 at 1; JX 48 at 10‒12.

PTO ¶ 30; JX 28 at 1. In 2020, Prasad believed Destiny would be worth approximately $10 billion, and that Ramadurgam would be entitled to $3.3 billion. See JX 24 at 2; Tr. 589:19‒590:7 (Prasad).

Prospectus at 17.

JX 394 at 2.

was created to hold investments in the top 100 venture-backed, late-stage, private,

technology unicorns. 42 Destiny manages Tech100 through Advisors, which

provides investment advisory services to Tech100 under an investment advisory and

management agreement.43

In early 2021, as Destiny began raising capital for Tech100, Prasad and

Ramadurgam agreed that Ramadurgam would enter into an employment agreement

with Destiny. The arrangement was documented in a June 6, 2021, engagement

agreement (“Engagement Agreement”).44 Under the Engagement Agreement,

Ramadurgam became a strategic adviser focused on one to two monthly initiatives

aligned with Destiny’s strategic priorities, fundraising, and managing relationships

with unicorn companies.45

The Destiny reorganization also included governance protections for future

equity issuances to Prasad and his affiliates. 46 In June 2021, the Board (Prasad and

Ramadurgam) approved via written consent a resolution requiring that “future offers

to purchase shares by any director of the Board or his affiliates . . . be approved by

Tr. 14:13‒17 (Ramadurgam); id. at 472:16‒473:23, 479:18‒23 (Prasad); see also JX 312.

PTO ¶ 15; JX 109.

JX 46.

Id.; Tr. 22:21‒23:11, 31:11‒34:16 (Ramadurgam); id. at 496:17‒18, 497:15‒17 (Prasad). 46

JX 28 at 2.

the affirmative vote of a majority of the directors who are disinterested in such

matter, even though the disinterested directors may constitute less than a quorum.”47

The same written consent approved the new equity grant to Prasad.48

With significant efforts from both co-founders, Tech100 raised approximately

$94 million through SAFEs from approximately 200 investors during 2021 and early

2022. 49 Destiny deployed that capital under the oversight of its investment

committee, which selected the investments. 50 Tech100’s portfolio consists of 23

technology companies. 51 Destiny recognized its first quarterly revenues in 2021.

JX 50 at 7.

Id. at 13.

JX 150; JX 164; Tr. 123:7‒10 (Ramadurgam); id. at 504:6‒12, 594:20‒595:1 (Prasad); see id. at 36:10‒37:21 (Ramadurgam) (explaining his substantial involvement in the fundraise and claiming responsibility for half of the amount raised); see, e.g., JX 65; JX 69; JX 182; JX 128; JX 148; see also Tr. 505:9‒24 (Prasad) (describing their fundraising process as involving going to everyone they knew).

Tr. 37:22‒38:15 (Ramadurgam). The investment committee met once or twice per week to review potential investments. The review began with the universe of private “unicorn” companies and used successive filters to identify suitable portfolio companies. Those filters included whether the company was U.S.-based or backed by top U.S. institutional investors, had a high-growth asset-light business model or revolutionary technology, was a market leader with significant room to scale, operating in a growing market, and benefited from network effects or economies of scale. After narrowing the list, the committee evaluated whether the companies were available at attractive prices. Tech100 would not invest in an otherwise suitable company if the price was too high. Id. at 38:16‒43:4. 51

JX 173 at 3‒4, 15; see Tr. 19:22‒20:1 (Ramadurgam); id. at 506:21‒508:21 (Prasad) (describing the capital deployment process and indicating that 50% of Tech100’s investment was in Space Exploration Technologies Corp. or “SpaceX”).

Those revenues were generated primarily through management fees paid to Advisors

for Tech100, as well as from the sale of portions of its Tech100 shares. 52

The fundamental premise of Destiny’s business model—i.e., that Tech100

would trade at a premium to NAV—is reflected in illustrative valuation models that

the founders shared with prospective investors and employees.53 A February 2021

model prepared by Prasad included a “Public Market Premium/Discount” line item

set at 50%, reflecting the assumption that public accessibility could cause Tech100’s

shares to trade above the value of its underlying assets.54 In September 2021, in

connection with the recruitment of a trader, Prasad shared another model that he had

previously discussed with Ramadurgam.55 The model used a default “Revenue

Multiple” of 30x, which Ramadurgam described as “very reasonable” for companies

with “quality recurring revenue businesses” and “consistent with [] what [they]

w[ere] seeing in the market.”56

PTO ¶ 15; JX 230 at 1; Tr. 90:10‒15 (Ramadurgam); id. at 619:15‒620:7 (Prasad). 53

JX 35; JX 37; JX 53; JX 54.

JX 37 at 1, 7; Tr. 102:20‒103:12 (Ramadurgam). The default assumptions were intended to “strike a balance of conservatism while [also] representing some of the incredible success private companies have experienced over the last few years.” Tr. 101:9‒102:17 (Ramadurgam).

JX 53; JX 54; Tr. 94:6‒95:23 (Ramadurgam).

JX 54 Tab “FY21 Destiny Valuation Model” Cell C6; Tr. 95:24‒96:9, 97:4‒5, 97:13‒ 15, 100:13‒14 (Ramadurgam).

D. Tech100’s Public Listing Process Begins.

Following the successful capital raise, the founders focused on taking

Tech100 public. At the same time, however, Ramadurgam was looking to reduce

his operational responsibilities. On April 28, 2022, Ramadurgam resigned from the

Tech100 board, leaving Prasad as its sole director.57 On May 12, 2022, Destiny filed

a registration statement with the Securities and Exchange Commission (“SEC”) to

list Tech100 on the NYSE.58 Afterward, Ramadurgam suspended his externalfacing activities to comply with the quiet period under the securities laws and

focused on internal strategy.59

One of Destiny’s marketing strategies involved a “share giveaway

program”—giving investors one or two pre-IPO shares of portfolio companies free

of charge.60 Ramadurgam and Prasad had used a similar strategy at Forge by giving

investors pre-IPO shares in electric car maker Tesla, Inc. The Tech100 giveaway

program contemplated giving away up to 700,000 Tech100 shares, in allotments of

one or two shares per investor.61

JX 394 at 2.

See JX 110.

Tr. 43:18‒45:6 (Ramadurgam).

Id. at 45:7‒47:16; see id. at 533:11‒24 (Prasad).

Id. at 335:6‒23 (Kumar); see id. at 727:10‒24 (Prasad).

E. Equity and Compensation Discussions

In December 2022, Prasad presented Ramadurgam with what Prasad

characterized as a standard package of refresher equity grants and bonuses.62 The

package included employee grants. It also included a grant to Prasad of 3,000,000

additional shares, representing approximately 20% of Destiny’s then-outstanding

shares. Prasad believed the grant was warranted because of his efforts in growing

Destiny’s investor base.63 Ramadurgam, whose approval was necessary, was

surprised by the size of Prasad’s proposed grant and told Prasad that he was willing

to approve only the refresher grants for employees. 64 But Prasad was unwilling to

separate the employee grants and bonuses from the proposed grant to himself.65 The

discussions stalled because the two co-founders were unable to reach an agreement,

and no grants or bonuses were approved at that time. 66

Ramadurgam and Prasad continued to discuss the issue over the ensuing

months.67 In March 2023, Ramadurgam and Prasad met at a café inside their Austin

JX 154; Tr. 47:22‒48:21 (Ramadurgam); id. at 517:17‒518:19 (Prasad).

Tr. 518:20‒519:2 (Prasad).

JX 158 at 2; Tr. 48:10‒49:9, 49:18‒50:12, 50:19‒51:18, 52:4‒9 (Ramadurgam); id. at 596:10‒16 (Prasad); see JX 50 at 7 (requiring that future offers to purchase shares by any director or his affiliates be approved by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constituted less than a quorum). 65

Tr. 51:19‒52:3 (Ramadurgam).

Id. at 51:19‒52:3; JX 184 at 2.

Tr. 520:11‒24 (Prasad).

apartment building. 68 Ramadurgam presented a proposal to grant Prasad additional

equity while protecting Ramadurgam against further dilution. 69 Ramadurgam was

also concerned that investors could view Prasad’s resulting equity grant as

unreasonable or unwarranted. 70 To address those concerns, Ramadurgam proposed

to entrust future equity-grant decisions to an independent body.71 He also suggested

involving an executive coach and mediator who had helped the co-founders during

the 2021 governance restructuring. 72 Prasad did not agree to that proposal.73

The dispute escalated in April 2023. During an argument at the café in Austin,

Ramadurgam told Prasad that litigation was a possibility. 74 Prasad viewed that

statement as a threat. By May 2023, Ramadurgam had engaged corporate counsel.75

He also continued proposing governance procedures for founder compensation.76

One proposal contemplated director qualification requirements concerning

Id. at 52:9‒11, 53:7‒14 (Ramadurgam).

JX 176 at 3; Tr. 54:12‒22 (Ramadurgam).

Tr. 597:15‒20 (Prasad).

JX 183 at 2; Tr. 55:3‒56:4 (Ramadurgam).

JX 183 at 2; Tr. 56:15‒57:22 (Ramadurgam).

JX 183 at 2; Tr. 52:11‒17, 57:12‒16 (Ramadurgam).

Tr. 523:22‒524:4 (Prasad).

See JX 184 at 2.

Id.; Tr. 58:10‒60:4 (Ramadurgam).

independence and industry expertise, along with tying the founders’ ability to elect

directors to their relative share ownership. 77

F. Prasad Plans to Oust Ramadurgam.

Ramadurgam made several attempts to communicate with Prasad about the

proposal, but Prasad never responded. 78 Instead, Prasad decided to oust

Ramadurgam. In August 2023, Prasad engaged lawyers in the Delaware office of

McCarter & English LLP (“McCarter”) to devise and quarterback “Project

Activation.” 79 A primary objective of the project was to squeeze out Ramadurgam

before Tech100 went public.80 At that time, the cap table included twelve minority

holders other than Ramadurgam. Those holders consisted of a consultant, three

investors, four advisers, and four employees. 81 Together, they held common stock

amounting to about 11% of Destiny’s equity on a fully diluted basis.82

McCarter devised a reverse-forward stock split as the most efficient and

effective means of eliminating Ramadurgam and leaving Prasad as the Company’s

JX 187; Tr. 63:2‒9 (Ramadurgam); see also id. at 61:7‒63:9 (Prasad).

Tr. 63:10‒20 (Ramadurgam); id. at 598:4‒6 (Prasad).

PTO ¶ 31; JX 219 at 1‒2; JX 233 at 1; Tr. 598:10‒18 (Prasad); see JX 433 Log Entry 79

No. 1. The primary lawyer on the engagement also represented Defendants at trial. 80

See Post-Trial Arg. at 37:21‒38:1, 46:6‒10.

See JX 225 Tab “Ownership.”

Id.

sole stockholder.83 The plan would entail the adoption of amendments to Destiny’s

certificate under 8 Del. C. § 242 and the cash-out of fractional interests under 8 Del.

C. § 155. Prasad and McCarter structured the scheme to keep Ramadurgam in the

dark at all times. The first step was to establish a cash-out price for the fractional

interests. To maintain stealth, McCarter—not the Company—engaged Houlihan

Capital Advisors, LLC (“HCA”) on September 8, 2023, to provide a valuation

opinion “as to the fair market value of the equity of Destiny” on a “going concern”

basis.84 The engagement letter stated that the valuation would be used to advise

Prasad on “potential transaction structures and to determine the valuation of the

Company in connection with said transactions.”85 It also stated that Prasad could

disclose the valuation opinion to Destiny’s Board for its consideration. The

engagement letter made clear, however, that the valuation opinion was “not intended

to be, and will not constitute, a fairness opinion” and that “[a]ny other use [wa]s

Dkt. 59 at 24:17‒20; Tr. 666:17‒21, 694:20‒23 (Prasad).

JX 237 at 1; see PTO ¶ 32. HCA is not to be confused with the global investment bank 84

Houlihan Lokey, Inc. Tr. 71:2‒7 (Ramadurgam); see also Post-Trial Arg. at 6:21‒22. 85

JX 237 at 1.

unauthorized and may be misleading.”86 It further provided that, before finalizing

its work, HCA would “confirm facts with Prasad.”87

After HCA began its work, Prasad and Philip Amoa from McCarter’s

Philadelphia office met several times with Theodore Frecka and Richard Bernard

from HCA.88 The valuation process depended heavily on information supplied by

Prasad. HCA did not conduct an independent examination of Destiny’s business or

verify the information it received. Prasad and Amoa supplied key inputs for the

valuation. They discussed deducting the full SAFE purchase amount from Destiny’s

equity value.89 They assumed that all 700,000 shares set aside for the Tech100 share

giveaway would be distributed, without providing the full context of the giveaway’s

promotional intent. 90 Prasad provided HCA with a written commentary regarding

Destiny’s prospects, risks, projected expenses, and the expected timing of Tech100’s

registration process.91 The commentary presented a more muted picture of Destiny’s

prospects than the one Prasad and Ramadurgam had previously shared with investors

Id.

JX 241; JX 242; JX 248; JX 250; see Frecka Dep. 90:8‒21, 101:13‒22, 126:2‒129:16 (referring to a conversation concerning the treatment of the SAFEs and the share giveaway program).

Frecka Dep. 128:23‒129:16.

JX 239; JX 248; JX 249.

JX 239; Tr. 602:2‒10 (Prasad).

and recruits. It described limited growth, no meaningful NAV premium, no nearterm ability to raise capital, and no new funds, all of which led to a depressed

valuation. 92

As it became likely that the SEC would grant effectiveness to the Tech100’s

registration statement on December 9, Prasad and the McCarter attorneys began

pressuring HCA to complete its valuation quickly.93 McCarter steered HCA toward

the most favorable outcome for its client. When HCA proposed sending draft

schedules with the preliminary indications of value on October 5, Amoa sought to

minimize the paper trail, suggesting that they should first “review on a Zoom

[call].”94 After the call, Amoa asked HCA to “provide [the] draft report” with the

“scenario chart, but [] limit scenario to current valuation.”95 On October 13, Frecka

wrote that, “given the stakes,” an HCA managing director would look at it “with a

critical eye.”96 HCA sent the draft valuation report to Prasad and Amoa on

October 16.97

See JX 239; see also Post-Trial Arg. at 7:8‒22.

JX 247 at 1; Tr. 656:21‒657:7 (Prasad); see also JX 251 at 4.

JX 248 at 1‒2.

JX 253 at 1.

Id.

JX 254 at 1.

By early November, Prasad had moved to the next step—adding henchmen to

the Board. Prasad contacted five individuals; three were not interested.98 Given the

pressing timeline, Prasad resorted to two backups, Kumar and Licona. 99 Kumar and

Prasad had been friends since their first year together in college, and Prasad served

as a groomsman at Kumar’s wedding.100 Licona, who operates businesses in the

wellness industry and is also an insurance broker, met Prasad in Austin in 2020.101

Kumar and Licona understood that Prasad’s ultimate goal was to oust Ramadurgam

from Destiny, to “clean[] up the cap table and remove that de[ad] equity from the

absentee and noncontributing co-founder.” 102 Prasad previewed his plan with

Kumar in New York on November 2.103 Kumar worried about his potential liability

for what Prasad was asking him to do, but Prasad reassured him by directing Kumar

to the indemnification provision in Destiny’s certificate of incorporation.104

Tr. 553:11‒13, 641:9‒642:13 (Prasad).

JX 263 at 1; JX 264 at 2; JX 259 at 2; Tr. 644:1‒4, 646:4‒11, 646:14‒16, 646:21‒647:11, 648:1‒3 (Prasad).

100

Tr. 29:16‒30:2 (Ramadurgam); id. at 300:6‒301:18, 342:11‒14 (Kumar).

101

Id. at 30:11‒16 (Ramadurgam); id. at 207:10‒18, 208:5‒17, 247:1‒4 (Licona). See id. at 204:1‒6.

102

Id. at 331:17‒19 (Kumar); see also id. at 266:19‒22 (Licona); id. at 358:3‒8, 418:17‒ 20 (Kumar). In startup practice, the phrase “dead equity” refers to equity held by a founder, employee, investor, or other participant who no longer contributes value to the company. See Alan S. Gutterman, Business Transactions Solutions § 59:111 (2026). 103

Tr. 305:2‒5, 356:2‒358:17 (Kumar); Kumar Dep. 60:19‒61:1.

104

JX 262 at 2; Tr. 307:12‒308:18, 359:3‒5, 360:9‒23 (Kumar).

Similarly, Prasad reached out to Licona, who accepted the offer knowing that his

first task as a director would be to adopt resolutions wiping out Ramadurgam’s

equity so that Prasad could “get over” the “director strife” between him and

Ramadurgam.105 Licona had never accepted an offer to join a board before because

of time constraints, but he accepted Prasad’s offer to become a director of Destiny

because Prasad “is one of the smartest guys” he knows and thought “it would be

beneficial just to have a relationship.”106

Once Kumar and Licona were committed to the scheme, Prasad moved to the

next phase of the plot. On Monday, November 6, Prasad executed a stockholder

written consent electing Kumar and Licona to the Board.107 Lest there be any doubt

that the fix was in, Kumar acknowledged his appointment in an email to Prasad

stating: “Let’s gooo. 9:30 Thursday, looking forward to it.” 108 The next day,

November 7, Prasad gave notice of a special meeting of the Board to be held virtually

at 9:30 a.m. Eastern Time on Thursday, November 9 (the “Special Meeting”).109 To

maintain secrecy, Prasad’s email to Ramadurgam, attaching the notice of the

105

Tr. 212:18‒24 (Licona).

106

Id. at 206:22‒207:7, 207:19‒24.

107

PTO ¶ 34; JX 267.

108

JX 265 at 2; Tr. 362:24‒363:15 (Kumar).

109

PTO ¶ 35; JX 269; JX 270; JX 275 at 2; Tr. 63:23‒64:14, 64:19‒65:4 (Ramadurgam); id. at 652:10‒12 (Prasad).

meeting, did not copy or reference Licona or Kumar. Neither the notice nor the

email included a proposed agenda or any mention of the items to be discussed. Later

that afternoon, Prasad’s counsel arranged to have the certificate amendments

effecting the reverse and forward stock splits to be filed with the Delaware Secretary

of State’s office “immediately following receiving approval” at Thursday’s Special

Meeting.110

Upon receiving notice of the special board meeting, Ramadurgam became

suspicious. Destiny had never held a formal Board meeting.111 Prasad had stopped

communicating with Ramadurgam during the prior month, and the notice did not

disclose the purpose of the meeting. 112 Ramadurgam asked Prasad what the meeting

would cover and whether he and Prasad remained the only Board members.113

Prasad did not answer. 114

On November 8, HCA sent its final report (the “HCA Report”) to Prasad and

McCarter.115 That same day, McCarter reiterated the need to proceed with

110

JX 274 at 2.

111

Tr. 64:15‒17 (Ramadurgam).

112

Id. at 65:5‒15, 66:17–67:1; id. at 364:16‒20 (Kumar); Kumar Dep. 105:17‒106:1; see JX 275 at 1.

113

JX 275 at 1‒2; Tr. 64:19‒65:4, 65:16‒66:16 (Ramadurgam); id. at 652:13‒22 (Prasad). 114

Tr. 63:10‒20, 66:17‒67:1 (Ramadurgam); id. at 652:13‒653:1, 653:15‒18 (Prasad). 115

PTO ¶ 33; JX 273 (the “HCA Report”).

immediate filing of the certificate amendments with the Delaware Secretary of State

after the Special Meeting.116

G. The Special Meeting

At 9:00 a.m. on November 9, 2023, Prasad sent a notice to Ramadurgam and

other stockholders announcing that he had elected Licona and Kumar to the Destiny

Board. 117 Thirty minutes later, Prasad convened the virtual Special Meeting by

Zoom, with cameras off. 118 In attendance were directors Prasad, Ramadurgam,

Kumar, and Licona, along with Ethan Silver, Destiny’s Chief Operating Officer and

in-house counsel, serving as the corporate secretary.119 No one from HCA attended.

At the outset, Prasad, seeking to avoid accountability, announced that recording of

the meeting was prohibited.120 Nevertheless, Ramadurgam surreptitiously recorded

the Special Meeting. 121

During the Special Meeting, Ramadurgam addressed Kumar and Licona

directly. He asked Kumar and Licona what they knew about the Company and to

explain their relationship with Prasad. 122 Licona described his background in

116

JX 274 at 1.

117

PTO ¶ 36; JX 278.

118

PTO ¶ 37.

119

Id.; Tr. 511:6 (Prasad).

120

Special Meeting Tr. 1:17‒18 (Prasad).

121

JX 280; Tr. 68:21‒69:12, 189:2‒5 (Ramadurgam). The audio recording is a trial exhibit. 122

Special Meeting Tr. 8:1‒5 (Ramadurgam).

insurance, retail, managing general agency work, startups, gyms, nutrition, safety,

and transportation technology. 123 He said he had known Prasad for about four

years. 124 Kumar described his experience in financial services consulting, fintech

work at J.P. Morgan, a software-as-a-service company serving the public sector, and

a Series B startup in the customer support space. 125 Kumar acknowledged that he

had known Prasad “since college.”126

1. The HCA Report

The meeting was scripted, literally.127 Prasad began the meeting with a

“discussion of the corporation’s current valuation and fair value.” 128 He stated that

he had engaged HCA to assist him in determining the fair value of the Company’s

equity.129 Prasad then shared the 69-page HCA Report in the Zoom chat. 130 Until

123

Id. at 8:9‒16 (Licona).

124

Id. at 8:14.

125

Id. at 8:23‒9:5 (Kumar).

126

Id. at 9:5‒6 (Kumar).

127

Tr. 654:7‒16 (Prasad). The script had been prepared by Prasad’s counsel, McCarter. See JX 433 Privilege Log Entry Nos. 409‒13, 433‒37, 463‒67, 535‒38, 542, 545, 548, 550‒55, 561‒63, 572‒76, 583, 591‒93, 627‒29, 635‒48 (emails among counsel and Prasad dated October through November 2023 and preceding the Special Meeting, reflecting the subject lines “Project Activation – Board Minutes and Script,” “Activation – Draft Script for Review,” “Script – Slightly Updated,” “Updated Script & Documents for Board Meeting”).

128

Special Meeting Tr. 2:18‒19 (Prasad).

129

Id. at 2:19‒21; Tr. 655:8‒11 (Prasad); id. at 70:12‒17, 71:2‒6 (Ramadurgam). 130

Special Meeting Tr. 2:21‒22 (Prasad).

that moment, Kumar, Licona, and Ramadurgam had never seen the HCA Report nor

any version of it. 131

Prasad gave the attendees no more than 15 minutes—an average of 13 seconds

per page—to review the HCA Report, which Prasad called a “comprehensive

document.”132 After approximately ten minutes, Prasad stated that there were a few

pages that he wanted to call out. 133 After 15 minutes, Prasad recited that HCA had

determined that the “fair value” of a Class A share and a Class B share was $0.14

per share, and a Class C share was $0.15.134 He lied. Nowhere did the HCA report

state that it was determining the “fair value” of Destiny or its shares. HCA stated

that it was determining “fair market value,” and Frecka admitted that the distinction

was “important.”135

Prasad explained that the anticipated public listing of Tech100 would have

positive effects, but emphasized that the Company’s revenue was expected to be

approximately 30% lower after the listing because of a less lucrative fee structure.136

Prasad then opened the floor for discussion. 137 After having only a few minutes to

131

See Tr. 656:1‒4 (Prasad); id. at 381:17‒19 (Kumar).

132

Special Meeting Tr. 2:24‒3:1 (Prasad); Tr. 322:18‒22 (Kumar); id. at 656:5‒7 (Prasad). 133

Special Meeting Tr. 3:8‒14 (Prasad); Tr. 656:8‒20 (Prasad).

134

Special Meeting Tr. 3:19‒24 (Prasad).

135

Frecka Dep. 222:12.

136

Special Meeting Tr. 4:1‒2, 4:7‒9 (Prasad).

137

See id. 5:5‒8.

review the HCA Report, Ramadurgam asked a series of questions about HCA’s

assumptions, to which Prasad responded. 138 Kumar and Licona, on the other hand,

asked no questions. 139

Prasad then pasted a resolution “to adopt the fair value prices” in the chat and

asked the directors to vote using the “chat function” on Zoom. 140 Ramadurgam

politely and calmly protested that he had not been given an agenda for the meeting

and registered his concern about not having been supplied sufficient information.141

But Prasad was entirely dismissive as reflected in the transcript of the Special

Meeting.

Ramadurgam: I’m saying that for me to take a legal action, without

knowing the context of the meeting and if there’ll be any other

repercussions of this which I’m not aware of, would make it

irresponsible for me to say, yes, since I have not been adequately

informed as to why we’re taking this action, what the plan is

subsequently in the meeting. And so, I don’t feel informed, and I feel

I was given last-minute notice just 30 minutes before this meeting of

the Board consent to add two new directors. It’s been – I don’t feel like

I’ve had the information to make educated decisions as a Board

member, and my questions to you, Sohail, over the last few days have

not been responded to. And so, I just want to state for the record that I

don’t have the information to vote on this.

138

Id. at 5:10‒12, 5:19‒6:2, 6:18‒24 (Ramadurgam).

139

Id. at 9:7‒9 (Prasad).

140

Id. at 9:11‒16.

141

Id. at 9:17‒19, 9:22‒10:8 (Ramadurgam); Special Meeting at 31:18:00‒31:29:00 (Ramadurgam); see Tr. 661:3‒21 (Prasad) (“Q. So even during the meeting, you didn’t want to give [Ramadurgam] the agenda for the meeting. Isn’t that right. A. Yes.”).

Prasad: So noted for the record. And having received three assenting

votes out of the four directors eligible to vote, these resolutions are

hereby adopted. . . . 142

2. The Transaction

Prasad next turned to Destiny’s capital structure. 143 He stated that the

Company’s objective was to “properly incentivize its employees” and to ensure that

those participating in the Company’s upside continued to invest in the Company.144

He also referred to the Company’s ability to attract talent, financing, and

investment.145 Prasad stated that Destiny’s capital structure did not “optimally serve

those purposes.”146 This was corporate-speak for “Ramadurgam has to go.”

Prasad proposed that the Board approve a reverse-forward stock split (the

“Transaction”) through amendments to Destiny’s certificate of incorporation.147 The

first certificate amendment would effect a reverse stock split at a ratio of 1,850,000

to one. Any resulting fractional interests would be paid out in cash based upon the

HCA valuation that the Board had just approved. The forward split amendment

would then effect a forward stock split at a ratio of one to 1,850,000. When

142

Special Meeting Tr. 9:22‒10:8 (Ramadurgam); id. at 10:9‒11 (Prasad); Tr. 375:4‒9, 375:20‒23 (Kumar); id. at 661:3‒662:3 (Prasad).

143

Tr. 663:9‒13 (Prasad).

144

Special Meeting Tr. 10:11‒15 (Prasad).

145

Id. at 10:15‒17; Tr. 663:14‒664:1 (Prasad)

146

Special Meeting Tr. 10:17‒18 (Prasad).

147

Id. at 10:18‒21.

Ramadurgam asked what Destiny’s capitalization would look like after the

Transaction, Prasad brushed him off, responding that he could not “speak to any

individual’s personal holdings or equity ownership.”148 In fact, the effect would be

that Ramadurgam and the 11 common equity holders would be cashed out, with

Prasad being the sole remaining stockholder. But the real target was Ramadurgam,

because Prasad had always intended to make the other stockholders whole through

new equity grants.

Ramadurgam asked Kumar and Licona whether they understood the legal

liability they could face. Prasad interrupted and instructed him to “keep any

questions, comments, or discussions specific to the resolution and the matter at

hand.”149 Kumar and Licona did not respond to Ramadurgam’s question and stayed

silent during the discussion about the Transaction.150 Ramadurgam protested that,

“as a significant shareholder,” he found this action “egregiously inappropriate and

unfair.”151 Prasad dismissively replied that the comment was “noted for the

record.”152 Kumar and Licona did not even voice their approvals during the meeting.

148

Id. at 13:16‒22.

149

Id. at 16:12‒17:2 (Prasad); Tr. 276:10‒277:6 (Licona).

150

Tr. 79:20‒24 (Ramadurgam); id. at 223:13‒15, 227:19‒21 (Licona).

151

Special Meeting Tr. 17:14‒16 (Ramadurgam); Tr. 280:16‒23 (Licona).

152

Special Meeting at 49:45:00‒49:46:00.

Instead, Prasad recorded that he, Kumar, and Licona had voted in favor of the

resolution through the chat function on Zoom. 153

3. The termination of the Engagement Agreement

The third agenda item was the termination of Ramadurgam’s Engagement

Agreement. 154 Prasad stated that Ramadurgam served as an at-will employee and

had made no material contributions to the Company except for a three-month period

from January to April 2021 during Tech100’s first private fundraise. Prasad recited

that, over the prior 18 months, Ramadurgam had been absent from day-to-day

operations apart from occasionally joining team meetings, making one-off

introductions, or reviewing an associate’s work, which Prasad estimated amounted

to less than five hours a month. Prasad also stated that Ramadurgam reportedly spent

more than 60 days at silent meditation retreats during the prior year. Prasad

recommended terminating the strategic-adviser relationship as being in the longterm best interests of the Company. 155 Ramadurgam objected, observing that his

proposed termination seemed to be in retaliation for having questioned Prasad’s

large equity grant to himself.156 Kumar and Licona remained mute and joined Prasad

153

Special Meeting Tr. 18:1‒2 (Prasad); Tr. 228:2‒3, 280:24‒281:20 (Licona). 154

Tr. 376:23‒377:4 (Kumar).

155

Special Meeting Tr. 18:5‒16 (Prasad).

156

Id. at 18:19‒19:2 (Ramadurgam).

in voting to terminate Ramadurgam through the Zoom chat function.157 Similarly,

Silver remained silent throughout the entire meeting.

The Board actions were implemented immediately. Within minutes of the

conclusion of the Board meeting, Prasad’s personal counsel, McCarter, arranged for

the certificate amendments effecting the reverse and forward stock splits to be filed

with the Delaware Secretary of State. 158 The combined effect was to cash out

Destiny’s minority stockholders and leave Prasad as the only stockholder holding

shares after the forward split. 159 The Company paid the cashed-out stockholders,

including Prasad, for their fractional interests. 160 The Transaction caused confusion

among at least one Destiny employee. At 5:07 p.m., an employee texted Prasad:

“Heya not really understanding the email on reverse split. What’s going on

here/what does it mean for my shares?”161

H. The Aftermath

Immediately after the Special Meeting, Ramadurgam asked Prasad to provide

written documentation of the resolutions and actions taken during the meeting, as

157

Id. at 19:9‒10; Tr. 231:2–5 (Licona).

158

PTO ¶ 39; JX 287 (certificate amendment effecting reverse stock split filed at 10:31 a.m.); JX 288 (certificate amendment effecting forward stock split filed at 10:32 a.m.). 159

Tr. 668:4‒9 (Prasad).

160

PTO ¶ 44; Tr. 667:21‒668:3 (Prasad).

161

JX 279 at 2.

well as a record of the discussion. But Prasad did not produce any document until

months later.

On December 22, 2023, just six weeks after Prasad cashed out his co-founder,

the SEC declared Tech100’s registration statement effective. 162 Before filing suit,

Ramadurgam offered to engage in mediation and reconciliation. Prasad was

unmoved and responded:

The transactions are complete and final, and the relevant former

fractional shares are cancelled. There is no possible claim that would

provide you any continued equity position. Given that, candidly I’m

not moved by any threat of litigation. It’s incredibly unlikely that any

claim you make would provide a greater monetary value than was

already provided. In fact, not only would I/we successfully prevail, the

cost of pursuing an extended, public litigation would certainly exceed

any potential monetary objectives you may have. 163

Destiny sent Ramadurgam and Pacific Premier Trust Custodian FBO Samvit

Ramadurgam IRA (the “Trust”) a total of $710,000 for his fractional interests.164

Ramadurgam returned the portion of the funds that had been sent to him personally.

The portion sent to the Trust has remained there since then.165 Ramadurgam did not

162

PTO ¶ 24.

163

JX 292.

164

See JX 303; Tr. 85:7‒13 (Ramadurgam). Despite claiming that the $710,000 paid to Ramadurgam in the reverse stock split was fair value, the Defendants were eager to tell the court that they were willing to settle the case by paying Ramadurgam $10.2 million. See Dkt. 61 at 2; Defs.’ Opening Br. 1; Post-Trial Arg. at 79:5‒10.

165

Tr. 85:14‒22, 189:11‒190:16 (Ramadurgam).

use those funds and treated them as escrow after receiving counsel’s advice against

accepting the cash-out consideration. 166

Ramadurgam filed this action in January 2024. Only after Ramadurgam filed

the present action and served discovery requests did Prasad produce the minutes of

the Special Meeting (the “Minutes”) and Board resolutions in February 2024.167

Prasad, with McCarter’s assistance, drafted the Minutes. 168 Neither Kumar nor

Licona approved them. 169

The Minutes omit and falsely represent portions of the Special Meeting.170

They do not include the questions and comments that Ramadurgam made during the

Special Meeting, even though Prasad repeatedly responded that many of

Ramadurgam’s comments were simply “noted for the record.” 171 Instead, the

Minutes indicate that the participants engaged in “robust discussion[s]” and that the

166

Id. at 190:17‒191:2.

167

JX 348 (the “Minutes”).

168

Tr. 662:10‒15 (Prasad). Prasad testified that he drafted the Minutes himself. Id.; but see JX 433 Privilege Log Entries Nos. 710, 727, 732, 735‒37, 739, 742, 752, 754, 760‒61, 763 (November and December 2023 emails among counsel and Prasad reflecting the subject lines “Updated Draft Board Minutes,” “Project Activation – Reconciling Board Meeting Script and Minutes,” and “Project Activation – Final Board Minutes”). 169

Tr. 282:16‒20 (Licona); id. at 441:16‒18 (Kumar).

170

Compare Special Meeting Tr., with Minutes.

171

Compare Special Meeting Tr. 10:9, 17:14‒20, with Minutes; see Tr. 661:3‒662:9, 670:20‒671:2 (Prasad); id. at 283:2‒7 (Licona). Those omissions did not concern Licona. Tr. 282:21‒283:1 (Licona).

“Board carefully deliberated” before approving the resolutions.172 That

representation is belied by the transcript of the meeting.

After the SEC declared Tech100’s registration statement effective, Destiny

moved forward with the share giveaway program.173 On March 18, 2024, out of the

700,000 maximum shares contemplated by the program, Destiny gave away 23,211

shares of Tech100.174 On March 25, 2024, Destiny filed three different amendments

to its certificate of incorporation.175 Those amendments authorized additional shares

and effected a forward split and a share reclassification.176

On March 26, 2024, Tech100 began trading on the NYSE under the ticker

“DXYZ.”177 Afterward, Advisors’s management fees increased. Before Tech100’s

public listing, Advisors earned 2% of Tech100’s invested capital per year. After the

listing, Advisors earned 2.5% of Tech100’s average gross assets at the end of the

two most recently completed calendar quarters, payable quarterly. 178 From the date

Tech100 began trading until the date of the trial, Tech100 never traded at a discount

172

Minutes at 1‒3; Tr. 662:16‒19, 673:15‒17 (Prasad).

173

See JX 239 at 2.

174

JX 376 at 1; Madsen Report ¶ 115.

175

JX 363; JX 364; JX 365.

176

Tr. 697:17‒698:17 (Prasad); JX 363; JX 364 at 2‒3; JX 365 at 2‒3.

177

PTO ¶ 16.

178

Id. ¶ 15; Prospectus at 5.

to NAV.179 In fact, from the listing through March 31, 2025, Tech100 averaged a

premium to NAV of more than 400%. 180

On April 2, 2024, Destiny granted new stock options to a number of

employees whose equity had been eliminated in the Transaction.181 Those grants

restored equity participation of some of the other cashed-out stockholders.182 During

the same month, Destiny sold some of its Tech100 shares for approximately

$9 million.183 A few weeks later, Tech100 filed a follow-on registration statement,

authorizing a $1 billion capital raise upon effectiveness.184 After trial, on July 15,

2025, the SEC granted effectiveness to a follow-on registration statement.185 On

179

Tr. 707:21‒708:2 (Prasad); Madsen Report ¶ 95.

180

Madsen Report ¶ 93.

See JX 367; JX 368; JX 369; JX 371. Destiny also granted stock options to a new 181

employee. See JX 370.

182

Compare JX 225 Tab “Ownership” Cell 9L (reflecting that Silver held 4.31% of Destiny’s equity on a fully diluted basis prior to the Transaction), with JX 367 (indicating that Silver was granted 7.5% after the Transaction). Compare JX 225 Tab “Ownership” Cell 21L (reflecting that Vincent Higgins held 1.72% of Destiny’s equity on a fully diluted basis prior to the Transaction), with JX 368 (indicating that Higgins was granted 5.25% after the Transaction). Compare JX 225 Tab “Ownership” Cell 28L (reflecting that Robert Blecher held 0.54% of Destiny’s equity on a fully diluted basis prior to the Transaction), with JX 369 (indicating that Blecher was granted 2% after the Transaction). Compare JX 225 Tab “Ownership” Cell 8L (reflecting that Christine Healey held 3.28% of Destiny’s equity on a fully diluted basis prior to the Transaction), with JX 371 (indicating that Healey was granted 4% after the Transaction).

183

JX 376; JX 384.

184

JX 386 at 3.

185

Destiny Tech100 Inc., Form N-2 Notice of Effectiveness (July 15, 2025).

August 8, 2025, Tech100 filed a prospectus supplement disclosing that it had entered

into an agreement with Jefferies LLC to offer and sell up to $1 billion of common

stock. 186

Since the Special Meeting, the Board has held a meeting every six months.187

Prasad currently owns 98% of Destiny’s equity on an undiluted basis and

approximately 69% on a diluted basis. 188 Before Destiny’s conversion to a limited

liability company, Prasad held 20,350,000 total shares. 189

I. Procedural History

On January 23, 2024, Ramadurgam filed a verified complaint against Destiny,

Prasad, Kumar, and Licona (the “Complaint”). The Complaint contains three

counts. Count I alleges Prasad breached his fiduciary duties as a controlling

stockholder. Count II alleges Prasad, Kumar, and Licona breached their fiduciary

duties to Ramadurgam as directors of Destiny. Count III alleges the Company

violated Section 155 of the Delaware General Corporation Law (“DGCL”) by failing

186

Destiny Tech100 Inc., Prospectus Supplement (Aug. 8, 2025).

187

Tr. 233:1–3 (Licona).

188

Id. at 591:15‒21 (Prasad); Prasad Dep. 34:12‒18.

189

See Pl.’s Opening Br. 51.

to pay fair value to Ramadurgam for his fractional interests that were cashed out in

the reverse stock split.

The court held a three-day trial, followed by post-trial briefing and

argument.190

II. ANALYSIS

A. The Fiduciary Duty Claims

“The elements of breach of fiduciary duty that must be proven by a

preponderance of evidence by the plaintiff are: (i) that a fiduciary duty exists; and

(ii) that a fiduciary breached that duty.” Heller v. Kiernan, 2002 WL 385545, at *3

(Del. Ch. Feb. 27, 2002), aff’d, 806 A.2d 164 (Del. 2002) (TABLE). “Proof by a

preponderance of the evidence means proof that something is more likely than not.

It means that certain evidence, when compared to the evidence opposed to it, has the

more convincing force and makes you believe that something is more likely true

than not.” Del. Exp. Shuttle, Inc. v. Older, 2002 WL 31458243, at *17 (Del. Ch.

Oct. 23, 2002) (citation modified).

“Directors of Delaware corporations owe two fundamental fiduciary duties to

the corporation and its stockholders—the duty of care and the duty of loyalty.” GBSP Hldgs., LLC v. Walker, 2024 WL 4799490, at *28 (Del. Ch. Nov. 15, 2024)

(citing Polk v. Good, 507 A.2d 531, 536 (Del. 1986)). “[A] shareholder owes a

190

Dkts. 79, 98‒100, 102; PTO ¶ 11.

fiduciary duty only if it owns a majority interest in or exercises control over the

business affairs of the corporation.” Kahn v. Lynch Commc’n Sys., Inc., 638 A.2d

1110, 1113 (Del. 1994) (citation modified) (quoting Ivanhoe P’rs v. Newmont Min.

Corp., 535 A.2d 1334, 1344 (Del. 1987)). There is no dispute that the Individual

Defendants owed fiduciary duties. Prasad owed fiduciary duties as Destiny’s

controlling stockholder, and as a director and officer. Kumar and Licona, as

directors, also owed fiduciary duties to Ramadurgam and the Company.

“When [fiduciaries] of a Delaware corporation are on both sides of a

transaction, they are required to demonstrate their utmost good faith and the most

scrupulous inherent fairness of the bargain.” Weinberger v. UOP, Inc., 457 A.2d

701, 710 (Del. 1983) (citing Gottlieb v. Heyden Chem. Corp., 91 A.2d 57, 57–58

(Del. 1952)). As the Delaware Supreme Court recently reaffirmed, “a controlling

stockholder is a fiduciary and must be fair to the corporation and its minority

stockholders when it stands on both sides of a transaction and receives a non-ratable

benefit.” In re Match Gp., Inc. Deriv. Litig., 315 A.3d 446, 460 (Del. 2024). In

those circumstances, “entire fairness is the presumptive standard of review.” Id. at

451.191

191

“[W]here the controller irrevocably and publicly disables itself from using its control to dictate the outcome of the negotiations and the shareholder vote, the controlled merger then acquires the shareholder-protective characteristics of third-party, arm’s-length mergers,

In this case, because Ramadurgam was cashed out of his shares in a reverse

stock split that created fractional interests, Section 155(2) of the DGCL required

Destiny to pay him in cash “the fair value of fractions of a share” as of November 9,

2023. 8 Del. C. § 155(2). In Applebaum v. Avaya, Inc., the Delaware Supreme Court

held that “fair value” in Section 155 “has a meaning independent of the definition of

‘fair value’ in Section 262” of the DGCL, the appraisal statute. 812 A.2d 880, 892

(Del. 2002); see id. at 893 (observing that “valuation guidelines for the right to

receive ‘fair value’ under Section 155(2)” differ from those under Section 262). But

the Court also indicated that “a Section 155(2) inquiry may resemble a Section 262

valuation if the controlling stockholder will benefit from presenting a suspect

measure of valuation, such as an outdated trading price, or a wrongfully imposed

private company discount.” Id. at 891; see also id. at 893 (“when a minority

stockholder is confronted with a freeze-out merger, the Section 262 appraisal

process will prevent the proponents of the merger from ‘reaping a windfall’ by

placing the full value of the company as a going concern into the merged entity while

compensating the dissenting stockholder with discounted consideration.”).

In the seminal post-Applebaum case applying this standard, this court held

that “[w]hen a controlling stockholder uses a reverse split to freeze out minority

which are reviewed under the business judgment standard.” Kahn v. M & F Worldwide Corp., 88 A.3d 635, 644 (Del. 2014), overruled on other grounds by Flood v. Synutra Int’l, Inc., 195 A.3d 754 (Del. 2018).

stockholders without any procedural protections, the transaction will be reviewed

for entire fairness with the burden of proof on the defendant fiduciaries.” Reis v.

Hazelett Strip-Casting Corp., 28 A.3d 442, 460 (Del. Ch. 2011). 192 The parties here

agree that entire fairness applies. 193 Therefore, Defendants bear the burden to prove

that the Transaction was entirely fair.

1. Whether the Transaction Was Entirely Fair

Entire fairness has “two basic aspects: fair dealing and fair price.”

Weinberger, 457 A.2d at 711. The inquiry is unitary. “[T]he test for fairness is not

a bifurcated one as between fair dealing and price.” Id. “All aspects of the issue

must be examined as a whole since the question is one of entire fairness.” Id. “A

strong record of fair dealing can influence the fair price inquiry, reinforcing the

unitary nature of the entire fairness test. The converse is equally true: process can

infect price.” Reis, 28 A.3d at 467 (citing Kahn v. Tremont Corp., 694 A.2d 422,

432 (Del. 1997) (“[H]ere, the process is so intertwined with price that under

Weinberger’s unitary standard a finding that the price negotiated by the [s]pecial

192

In Reis, this court reasoned that when the remedy does not call for anything other than an award of fair value, it is appropriate to “conduct the same essential inquiry as in an appraisal, albeit with more leeway to consider fairness as a range and to consider the remedial objectives of equity.” 28 A.3d at 468 (citation modified). As explained below, the remedy in this case calls for something other than a purely monetary award. 193

Pl.’s Opening Br. 33; Defs.’ Opening Br. 1, 18, 41; Pl.’s Answering Br. 24‒25; Defs.’ Answering Br. 7; Post-Trial Arg. at 3:22‒24; see also id. at 36:15‒16 (“Mr. Prasad, who was the majority owner – that’s why we’re conceding it’s an entire fairness case. We have a majority stockholder here.”).

[c]ommittee might have been fair does not save the result.” (citation modified))). At

the same time, the Delaware Supreme Court has held that “[a] fair process usually

results in a fair price. Therefore, the proponents of an interested transaction will

continue to be incentivized to put a fair dealing process in place that promotes

judicial confidence in the entire fairness of the transaction price.” Ams. Min. Corp.

v. Theriault, 51 A.3d 1213, 1244 (Del. 2012). On the other hand, the Delaware

Supreme Court has held that a transaction can be entirely fair based upon a finding

of fair price, even if the process was not fair. See Emerald P’rs v. Berlin, 840 A.2d

641 (Del. 2003) (TABLE) (affirming trial court’s determination that the transaction

was entirely fair despite “find[ing] that the many process flaws in th[e] case raise[d]

serious questions as to the independent directors’ good faith” but deferring to the

trial court’s determination that “the price was fair”).

Defendants seek to reduce this case solely to an evaluation of the fair price

prong of the entire fairness analysis. They concede that the Transaction was not the

product of a fair process.194 They essentially argue that consideration of the process

prong is meaningless because Plaintiff received the substantial equivalent of what

194

PTO ¶¶ 57, 90; Defs.’ Opening Br. 19. Ironically, despite this admission, Licona and Kumar insisted at trial that the process was fair. See Tr. 239:16–18 (Licona) (“Q. We can agree the process was not fair; right? A. I disagree with that.”); id. at 328:21‒24 (Kumar) (“Q. So how could that have been fair to the stockholders and the company, Mr. Kumar? A. It was extremely fair, because this was essentially a one-to-one transaction.”). This testimony not only confirms that Licona and Kumar were (and are) inattentive and uninformed, but also that they were simply doing Prasad’s bidding.

he held before the Transaction.195 Defendants’ strategy relies heavily on the

outcome in In re Trados Inc. Shareholder Litigation, 73 A.3d 17, 76 (Del. Ch.

2013). 196 In Trados, this court held, after trial, that the defendants had not proven

fair dealing, but had proven fair price because the common stock had no economic

value before the merger. Id. at 76‒78. Under those circumstances, “the common

stockholders received in the [m]erger the substantial equivalent in value of what they

had before.” Id. at 78.

Trados is inapposite. Unlike in Trados, Destiny’s back was not against the

wall, and Ramadurgam’s shares in Destiny were not valueless. To the contrary,

Destiny was on the precipice of taking Tech100 public, realizing the fundamental

vision of the co-founders’ business plan. Ramadurgam held a substantial equity

interest in Destiny that Prasad chose to wipe out shortly before Tech100 began

publicly trading. The court declines Defendants’ invitation to write the obituary of

the fair process prong of the entire fairness standard. 197 Rather, the court will apply

the entire fairness standard in line with the Delaware Supreme Court’s admonition

to organize the analysis in accordance with the Weinberger factors. See In re Tesla

Motors, Inc. S’holder Litig., 298 A.3d 667, 702 (Del. 2023).

195

Defs.’ Opening Br. 41.

196

Defs.’ Opening Br. 41‒42.

197

If that obituary is to be written, it will be authored by this court’s managing editors at the Delaware Supreme Court.

a. Fair dealing

“The element of ‘fair dealing’ focuses upon the conduct of the corporate

fiduciaries in effectuating the transaction.” Tremont, 694 A.2d at 430. Fair dealing

“embraces questions of when the transaction was timed, how it was initiated,

structured, negotiated, disclosed to the directors, and how the approvals of the

directors and the stockholders were obtained.” Weinberger, 457 A.2d at 711.

Defendants did not prove fair dealing. Instead, the evidence overwhelmingly

demonstrated that Prasad was dealing from the bottom of the deck, and Licona and

Kumar were in on the hustle.

i. Initiation and timing

The first Weinberger factor examines how the decision under challenge was

initiated. See Weinberger, 457 A.2d at 711. The scope of the first Weinberger factor

is not limited to the formal act of making the proposal; it encompasses actions taken

in the period leading up to it. See Rosenblatt v. Getty Oil Co., 493 A.2d 929, 938

(Del. 1985) (applying Weinberger and considering evidence concerning how the

controller structured the transaction before negotiations began); Tremont, 694 A.2d

at 431 (analyzing initiation and timing as part of the fair-dealing inquiry).

Prasad initiated the Transaction for the sole purpose of wiping out his cofounder, Ramadurgam. Prasad timed the Transaction to occur when Tech100 was

“very close” to the final stages of the SEC registration process, a critical stage that

would test Destiny’s business thesis. 198 Prasad admits this was his objective.199

Defendants argue that Tech100’s later trading history and later capital raising

developments were not known or knowable on November 9, 2023. But that is

precisely why the process in this case infects the fair price analysis. Prasad timed

the transaction to eliminate Ramadurgam’s equity before Tech100’s public listing

could provide market evidence bearing on Destiny’s access-premium thesis. That

timing gave Prasad the basis to argue that the value of Tech100—Destiny’s primary

asset—remained uncertain as of the Transaction date. Prasad’s strategic timing of

the Transaction before a milestone that both co-founders believed would positively

affect Destiny’s value evidences unfairness.

The timing of the pre-meeting steps reinforces that conclusion. On

November 7, before HCA sent its final report and before the Special Meeting, a

McCarter paralegal arranged for a filing service to be on standby for two priority

Delaware filings immediately after the Special Meeting. That step is another strong

indicator that Prasad and his attorneys knew that Kumar and Licona were passive

participants in Prasad’s scheme and would approve the Transaction without making

198

Special Meeting Tr. 4:2‒5 (Prasad).

199

Post-Trial Arg. at 37:21‒38:1, 46:6‒10.

any inquiry. It also reveals the HCA Report and the Special Meeting as merely

components of a predetermined transaction.

ii. Negotiation and structure

The next Weinberger factor examines how the transaction was negotiated and

structured. See Weinberger, 457 A.2d at 711.

There was no negotiation over the Transaction. Prasad leveraged his control

position to eliminate Ramadurgam as retribution for his suggesting they select

independent, qualified directors to consider Prasad’s outsized demands for

additional equity.

The structure of the Transaction likewise favored Prasad. The Transaction

was a reverse-forward stock split. Prasad chose the 1,850,000-to-one reverse-split

ratio because he was the only stockholder who held more than 1,850,000 shares, and

he admitted that the ratio was selected because it would leave him as the sole

remaining stockholder.200 The nearly instantaneous forward split restored Prasad’s

remaining whole shares to his pre-split position, giving him sole ownership of

Destiny’s equity.

Prasad also chose the reverse-forward stock split instead of a merger to avoid

the stockholder notice obligations and deprive Ramadurgam of the right to seek

200

Prasad Dep. 178:3‒6, 191:7‒11.

appraisal of his shares. 201 As Licona rationalized, the reverse-forward stock split

was “the most feasible way” to eliminate Ramadurgam, because “his shares would

become fractional, and those shares could be then cashed out.”202

Prasad’s appointment of Kumar and Licona reinforced that structure. Prasad

appointed them three days before the Special Meeting. They were not appointed to

negotiate with Prasad, test the Transaction, or inquire into the facts.

iii. Disclosure and approval

The final Weinberger factors examine disclosure and approval. See

Weinberger, 457 A.2d at 711‒12.

The notice of the Special Meeting did not disclose the agenda, and Prasad

ignored Ramadurgam’s requests to disclose the meeting’s purpose and whether he

and Prasad remained the only directors. Prasad did not disclose that he had

appointed Kumar and Licona to the Board until 30 minutes before the meeting.

Ramadurgam entered the Special Meeting unaware of Prasad’s plan to eliminate

Ramadurgam’s equity.

201

See 8 Del. C. § 251(c) (requiring, when a merger is submitted for stockholder approval at a meeting, notice of the time, place, and purpose of the meeting at least 20 days before the meeting and a copy or brief summary of the merger agreement); id. § 228(e) (requiring prompt notice to nonconsenting stockholders when corporate action is taken by less than unanimous written consent); id. § 262(d)(2) (requiring notice to stockholders when a merger is approved by written consent and providing a period to demand appraisal). 202

Tr. 220:6‒15 (Licona).

Prasad did not disclose the 69-page HCA Report until the meeting was

underway. No one from HCA was invited to attend the meeting to explain the HCA

Report—which had been prepared for Prasad personally, not for the Company—

even though Prasad was asking directors to rely upon it. Prasad gave the attendees

no more than 15 minutes to review it, and he misrepresented the document. Prasad,

Kumar, and Licona then adopted the per-share values from the HCA Report

essentially sight unseen, and they did so knowing that the next item of business was

the reverse-forward stock split. When Ramadurgam asked what else was on the

agenda, Prasad did not answer, and his henchmen sat mute. Prasad then counted the

three votes in favor and announced that the valuation resolution had been approved.

When Prasad presented the reverse-forward stock split proposals,

Ramadurgam asked what Destiny’s capitalization would look like after the

Transaction. Prasad dodged Ramadurgam’s legitimate inquiry, feigning that he

could not “speak to any individual’s personal holdings or equity ownership.”203 This

was another lie, to which Licona and Kumar were complicit.

The approval process was equally deficient. The Board’s majority approved

the HCA Report, the Transaction, and the termination of the Engagement Agreement

without asking any questions or engaging in discussion. McCarter’s pre-meeting

203

Special Meeting Tr. 13:21‒22 (Prasad).

arrangements with the Delaware Secretary of State to record the certificate

amendments confirm that immediate board approval was never in doubt.

The overwhelming evidence exposed Kumar and Licona as faithless

fiduciaries. They knew that they had been appointed to approve resolutions that

would end the co-founder dispute on Prasad’s terms, and they did not hesitate to

oblige. Kumar expressed willingness to help Prasad “clean[] up the cap table and

remove that de[ad] equity from the absentee and noncontributing co-founder.”204

Kumar and Licona approved the Transaction without making any meaningful

inquiry.

Kumar’s testimony illustrates the point. He believed the HCA Report was a

fairness opinion, even though the first page clearly indicated that it was not.205 He

did not know which valuation methodologies HCA had used.206 He did not review

any of the documents underlying the HCA Report and assumed that HCA had

received what it needed. 207 He did not know why 1,850,000 was selected as the split

Tr. 331:17‒19 (Kumar); see also id. at 266:19‒22 (Licona); id. at 358:3‒8, 418:17‒20 204

(Kumar).

205

Id. at 379:18‒381:13, 381:17‒19 (Kumar); Kumar Dep. 137:15‒138:3.

206

Tr. 404:18‒406:8, 406:13‒18 (Kumar).

207

Id. at 381:23‒382:5, 404:3‒406:23, 410:6‒11, 411:5‒22, 416:12‒417:11.

ratio.208 He did not know what a closed-end fund was. 209 He also believed that

Tech100’s management fees to Destiny had nothing to do with Destiny’s value.210

Similarly, Licona asked no questions about the Transaction and glibly testified

that the HCA Report was “self-explanatory,” even though he had no time to read

it.211 He did not seek or request independent financial or legal advice, asserting to

the contrary that in his experience “[i]n the middle of a board meeting . . . no one

has ever” considered “go[ing] [to] get independent financial advice.”212 He was not

concerned that Prasad had personally retained HCA and had been the principal

source of the information for HCA’s valuation. In Licona’s view, Prasad, “as the

person in charge of the operation,” “would do the right thing” in presenting

information to HCA. 213 Licona knew that it was in Prasad’s personal financial

interest for the cash-out price to be as low as possible, but Licona did not consider

that fact relevant to his role. 214 Nor did Kumar or Licona ask for Ramadurgam’s

side of the story before the meeting, and they chose to ignore his substantive

questions at the meeting. When Ramadurgam asked whether they understood their

208

Id. at 418:5‒13.

209

Kumar Dep. 193:2‒7.

210

Id. at 198:9–20.

211

Tr. 223:13‒17 (Licona).

212

Id. at 244:14‒21, 245:8‒17, 270:4‒10; Licona Dep. 165:5‒10.

213

Tr. 221:20‒222:4 (Licona).

214

Id. at 269:8‒19.

legal responsibility and the liability they could face, Prasad interrupted and directed

him to keep his comments to the resolution. When Ramadurgam stated that, “as a

significant shareholder,” he found the Transaction “egregiously inappropriate and

unfair,” no one asked a question, requested more time, or sought additional

information.215 All the while, Kumar and Licona stood mute when their fiduciary

duties demanded otherwise.

Defendants emphasize that Kumar and Licona did not receive compensation

to serve on the Board, had no business relationship with Prasad other than being on

Destiny’s board, and were not expressly instructed how to vote. This argument

reflects a fundamental misunderstanding of a director’s fiduciary duties. Directors

are presumed to be informed, disinterested, and independent. See Aronson v. Lewis,

473 A.2d 805, 812 (Del. 1984), overruled on other grounds by Brehm v. Eisner, 746

A.2d 244 (Del. 2000). But that is only a presumption. When applying the entire

fairness test, the inquiry must focus on whether the directors actually discharged

their duties and functioned as a meaningful check on a conflicted controller.216

215

Special Meeting Tr. 17:14‒19 (Ramadurgam); see id. at 17:20‒23 (Prasad). 216

See, e.g., Telephonic Post-Trial Bench Ruling, Eldridge SMT Hldgs. LLC et al. v. Hall et al., C.A. No. 2025-0608-PAF, at 31:1‒5 (Del. Ch. Oct. 24, 2025) (TRANSCRIPT) (explaining that independence is not a “formalistic qualification,” but a substantive attribute tied to the ability to exercise judgment); id. at 32:4‒15 (discussing Aronson v. Lewis, 473 A.2d 805, 816 (Del. 1984), overruled on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000), and Beam ex rel. Martha Stewart Living Omnimedia, Inc. v. Stewart,

Kumar and Licona failed miserably, and it is not a close call. The two directors

willingly supplied the votes Prasad needed to approve the Transaction on short

notice without being informed. In other words, the Board enabled the approval

mechanism for the controller-designed cash-out. See Reis, 28 A.3d at 460 (“A

reverse split under those circumstances is the ‘functional equivalent’ of a cash-out

merger.” (citing Metro. Life Ins. Co. v. Aramark Corp., 1998 WL 34302067, at *3

(Del. Ch. Feb. 5, 1998))).

b. Fair price

Fair price “relates to the economic and financial considerations” of the

transaction, “including all relevant factors: assets, market value, earnings, future

prospects, and any other elements that affect the intrinsic or inherent value of a

company’s stock.” Weinberger, 457 A.2d at 711.

The court’s task is not to pick a single number, as it would for a

damages calculation, but to determine whether the transaction was one

“that a reasonable seller, under all of the circumstances, would regard

as within a range of fair value; one that such a seller could reasonably

accept.”

In re Sears Hometown & Outlet Stores, Inc. S’holder Litig., 309 A.3d 474, 520 (Del.

Ch.) (quoting Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1134, 1143 (Del. Ch.

845 A.2d 1040, 1050 (Del. 2004)); see also Aronson, 473 A.2d at 816 (defining independence as the capacity to decide based on “the corporate merits of the subject before the board rather than extraneous considerations or influences”); Beam, 845 A.2d at 1050 (explaining that independence is compromised where a director’s discretion would be “sterilized”).

1994), aff’d, 663 A.2d 1156 (Del. 1995)), modified on reargument, 2024

WL 3555781 (Del. Ch. July 2, 2024); see also Cede & Co. v. Technicolor, Inc., 2003

WL 23700218, at *2 (Del. Ch. Dec. 31, 2003) (“The value of a corporation is not a

point on a line, but a range of reasonable values . . .”), aff’d in part, rev’d in part on

other grounds, 884 A.2d 26 (Del. 2005). Thus, the question is whether Defendants

proved that the price approved in the Transaction fell within a range of fairness—

one that a reasonable seller, under all the circumstances, would reasonably accept.

Defendants rely principally, and half-heartedly, on the HCA Report. They

argue that HCA’s contemporaneous valuation, their expert’s defense of that

valuation, and the evidence regarding Forge’s recent acquisition of a competitor to

Destiny establish that the cash-out price was fair.217 Plaintiff responds that the HCA

Report was not a fairness opinion, was prepared for use by the controller and his

counsel, relied on management-supplied information, and materially understated

Destiny’s value.218

The HCA Report does not help Defendants to satisfy the fair price prong for

three principal reasons. First, HCA’s engagement and the source of information

cannot be disentangled from the controller’s conflict. Second, HCA’s treatment of

Tech100 and Destiny’s management fee arrangement understates the core value

217

Defs.’ Opening Br. 19‒22.

218

Pl.’s Answering Br. 27‒31.

drivers in Destiny’s business model. Third, HCA’s capital structure adjustments

consistently moved value downward in favor of the controller. Therefore,

Defendants did not carry their burden of proving fair price.

i. The HCA Report

HCA issued the HCA Report on November 8, 2023, and used a valuation date

of September 30, 2023. 219 The HCA Report was prepared for McCarter—Prasad’s

personal counsel—pursuant to the September 8, 2023, engagement letter. 220 The

engagement letter expressly stated that the HCA’s final product “[wa]s not intended

to be, and will not constitute, a fairness opinion” and that “[a]ny other use [wa]s

unauthorized and may be misleading.”221 HCA understood that the valuation would

be used by Prasad, described as Destiny’s “controlling owner,” and by McCarter to

advise Prasad on potential transaction structures and to determine the valuation of

the Company in connection with said transactions. 222 In other words, HCA’s work

was not generated through a process designed to simulate arm’s-length bargaining.

See M.P.M. Enters., Inc. v. Gilbert, 731 A.2d 790, 797 (Del. 1999) (“A merger price

resulting from arms-length negotiations where there are no claims of collusion is a

very strong indication of fair value.”). HCA’s client was never the Company. From

219

See HCA Report at 2.

220

Id.

221

Id. at 2, 6.

222

Id.

the beginning, the client was always Prasad, though McCarter retained HCA, and

the work product from the engagement was intended to assist the controlling

stockholder in formulating and executing a controller-favored transaction.

HCA purported to value Destiny on a fair-market-value basis.223 It defined

fair market value as the price at which property would change hands between a

willing buyer and a willing seller, neither under compulsion, and both having

reasonable knowledge of relevant facts.224 By contrast, fair value protects the

stockholder’s proportionate interest in the company as a going concern. See Ban v.

Manheim, 339 A.3d 41, 66 (Del. Ch. 2025) (“[T]he fair price inquiry generally

involve[s] comparing what the stockholders received with their proportionate share

of the corporation’s value as a going concern.”). Thus, “[t]he true ‘test of fairness’

is whether the minority stockholder receives at least ‘the substantial equivalent in

value of what he had before.’” Id. at 67 (quoting Sterling v. Mayflower Hotel Corp.,

93 A.2d 107, 114 (Del. 1952)).

The source of information and the valuation methodology

The HCA Report states that management represented that the information

provided was reasonably complete and accurate, and that HCA did not

223

HCA Report at 2, 4, 6‒8, 40‒41, 43, 48‒49.

224

Id. at 2, 6 (citing Internal Revenue Ruling 59-60).

independently examine that information.225 Here, the source of that information is

particularly important. HCA relied on information supplied by Prasad. Ending the

inquiry there would risk overlooking a key implication—that Prasad had the

strongest economic incentive to support the lowest valuation possible. He and

McCarter supplied and influenced HCA’s treatment of certain inputs from the outset,

including the SAFEs, the Tech100 share giveaway, and Destiny’s prospects and

risks. 226 The context surrounding the drafting of the HCA Report is critical in

assessing the reliability of HCA’s analysis. See In re Dole Food Co., Inc. S’holder

Litig., 2015 WL 5052214, at *2 (Del. Ch. Aug. 27, 2015) (finding that management

manipulated projections and created an “informational deficit,” depriving the special

committee and its financial adviser of reliable information necessary to negotiate

and evaluate the transaction effectively).

HCA selected a market approach and used the guideline public company

method.227 The HCA Report outlines why other valuation methods would not be

225

HCA Report at 2, 51.

226

Tr. 682:21‒683:19 (Prasad) (discussing the commentary document prepared for HCA); id. at 756:22‒757:3, 757:24‒758:8 (Madsen) (testifying that certain projections and costs in the HCA Report reflected statements made by Prasad to HCA for purposes of its valuation); see also Post-Trial Arg. at 7:1‒7 (Plaintiff arguing that HCA did not receive information reflecting a more favorable view of Destiny’s prospects, including the 15(c) questionnaire, valuation models, and investor materials).

227

HCA Report at 4, 43‒50.

considered proper for valuing Destiny.228 But that methodological choice left the

entire report exposed to any shortcomings in HCA’s selection of the guideline public

companies. See, e.g., Merion Cap., L.P. v. 3M Cogent, Inc., 2013 WL 3793896, at

*7 (Del. Ch. July 8, 2013) (concluding that the comparable companies analysis was

unreliable because it relied on companies that were not comparable).

HCA selected 19 guideline public companies.229 Frecka could not explain

why HCA selected the specific guideline companies it used, other than by referring

to the companies’ AUM and revenue.230 Defendants minimize that criticism,

responding that the experts generally worked from a common universe of potentially

comparable asset managers and that the dispute concerned valuation judgment.231

The court agrees that selecting guideline companies involves a degree of judgment.

But Defendants bore the burden of showing that HCA’s judgment was reliable, and

they did not develop a persuasive explanation for why the selected companies “are

228

HCA rejected a discounted cash flow (“DCF”) analysis because a long-term cash-flow forecast suitable for a DCF was not available, Destiny was unprofitable as of the valuation date, and management expected higher operating expenses in the future. Id. at 40. It rejected a comparable transactions method because it could not identify a sufficiently robust set of transactions involving comparable target companies with publicly available data. Id. It rejected a prior transactions method because it was not aware of recent or pending arm’s-length transactions representative of fair market value. Id. It rejected an adjusted net asset method because Destiny was a going concern and was not a holding company in liquidation or expected to liquidate. Id.

229

HCA Report at 43.

230

Tr. 778:7‒17 (Madsen); Post-Trial Arg. at 16:19‒23, 89:3‒4.

231

Post-Trial Arg. at 49:1‒24, 63:3‒64:10.

truly comparable to [Destiny].” See Laidler v. Hesco Bastion Env’t, Inc., 2014 WL

1877536, at *8 (Del. Ch. May 12, 2014) (indicating the same concern regarding the

selection of the guideline companies).

HCA considered multiples of a variety of indicators but concluded that two

metrics were most applicable: enterprise value to AUM (the “EV/AUM”) and

enterprise value to revenue (the “EV/Revenue”). 232 The median EV/AUM multiple

for the guideline companies was 1.6%, and the median EV/Revenue multiple was

2.91x.233

HCA selected an EV/AUM multiple of 1.60%, in line with the peer-company

median, and an EV/Revenue multiple of 0.70x, substantially below the peercompany median of 2.91x.234 HCA reasoned that lower multiples were warranted

because Destiny was smaller, less diversified, less profitable, and riskier than the

guideline companies.235 HCA also relied on management’s expectation that revenue

would be approximately 30% lower after Tech100’s IPO.236 That assumption is

challenged by other contemporaneous statements and representations that Prasad

232

HCA Report at 44.

233

Id.

234

Id. at 47.

235

Id. at 45‒46.

236

Id. at 45.

made.237 At the same time, HCA recognized that Destiny generated more revenue

per dollar of AUM than the guideline companies, suggesting that the higher AUM

multiple was warranted, and that peers making direct investments in private

companies generally traded at higher multiples, suggesting that higher multiples

“may be warranted.” 238 HCA nevertheless selected only the median EV/AUM

multiple and a below-median EV/Revenue multiple.

That choice had a material effect on the valuation. Applying those selected

multiples, HCA used AUM of $56,076,786 and last-twelve-months revenue of

$1,842,009.239 The EV/AUM method produced an indicated enterprise value of

$897,229, and the EV/Revenue method produced an indicated enterprise value of

$1,289,406.240 After deducting debt of $103,250, the two methods produced equity

values, excluding cash, of $793,979 and $1,186,156. 241 HCA weighted the two

indications equally, resulting in an equity value of $990,067, excluding cash. 242

237

See Tr. 778:21‒779:18 (Madsen) (noting that HCA focused on a 2.5% growth rate, misinterpreted quarterly growth as annual growth, and that the lower assumption was inconsistent with projections made in the ordinary course); cf. id. at 869:6‒871:14 (Lesovitz) (defending HCA’s use of lower multiples based on declining revenues and actual company performance).

238

HCA Report at 46.

239

Id. at 47.

240

Id.

241

Id.

242

Id.

Capital structure and key value drivers

Destiny’s business model relies on two principal value drivers: Destiny’s

management fees and Destiny’s ownership of Tech100 shares. HCA’s treatment of

Destiny’s Tech100 shares moved the value downward. Destiny owned 1,455,276

Tech100 shares.243 HCA excluded 700,000 shares that it understood would be given

away upon Tech100’s IPO and an additional 17,000 shares that would be sold or

given away to satisfy NYSE listing requirements. As a result, HCA valued only

738,276 Tech100 shares.244 HCA multiplied those shares by Tech100’s reported Q2

2023 NAV per share of $4.974, producing an indicated value of $3,672,185.245 HCA

then applied a 15% discount to NAV, reasoning that closed-end funds typically trade

at a discount to NAV and that Tech100’s recent performance and broader market

sentiment in the technology sector supported a higher-end discount. 246 That

produced a discounted Tech100 value of $3,121,357.247

HCA’s treatment fails to properly account for Destiny’s business thesis. The

anticipated giveaway was up to 700,000 shares, not a fixed obligation to transfer all

243

Id. at 14, 46, 47 n.6.

244

Id. at 46.

245

Id. at 47 & n.6.

246

Id. at 47 & n.7.

247

Id. at 47.

700,000 shares for no value. 248 Additionally, HCA did not assign any value to the

giveaway’s promotional purpose. 249 That omission is at odds with the principle that

“when the court determines that the company’s business plan as of the merger

included specific expansion plans or changes in strategy, those are corporate

opportunities that must be considered part of the firm’s value.” Del. Open MRI

Radiology Assocs., P.A. v. Kessler, 898 A.2d 290, 315 (Del. Ch. 2006). Moreover,

HCA treated the additional 17,000 shares as if they had no value, even though shares

sold for listing purposes would generate proceeds. And the 15% NAV discount

treated Tech100 as an ordinary closed-end fund expected to trade below NAV,

without taking into account Destiny’s core business thesis. Closed-end funds do not

mechanically trade at discounts. Premiums and discounts vary with investor demand

and sentiment, and each fund has its own characteristics. See Charles M.C. Lee,

Andrei Shleifer & Richard H. Thaler, Investor Sentiment and the Closed-End Fund

Puzzle, 46 J. Fin. 75 (1991).

Tech100 never traded at a discount to NAV after listing, and Prasad

acknowledged that Ramadurgam “ended up being correct” about Tech100 trading at

248

See Prospectus at 62, 65; Post-Trial Arg. at 88:3‒4.

249

See Aswath Damodaran, Valuing Companies with Intangible Assets 35 (Sep. 2009), https://pages.stern.nyu.edu/~adamodar/pdfiles/papers/intangibles.pdf (explaining that brand name advertising may have valuation consequences because it can build intangible value).

a premium to NAV. 250 Although later trading evidence does not establish the

premium known or knowable on November 9, 2023, it is a useful check against

HCA’s assumption that Tech100 should be valued at a discount to NAV. See

Gonsalves v. Straight Arrow Publ’rs, Inc., 701 A.2d 357, 362 (Del. 1997) (“[P]ost[transaction] evidence is not necessarily inadmissible to show that plans in effect at

the time of the [transaction] have borne fruition.”) (citation modified).

After adding cash, management fees payable, and the discounted Tech100

investment, HCA concluded that Destiny’s total equity value was $7,965,529 on a

controlling, marketable basis. 251 HCA then deducted the $5,012,955 SAFE purchase

amount, reasoning that, in a liquidity event before termination of the SAFE

agreements, SAFE investors could elect to receive a cash payment equal to the

purchase amount or receive common stock equal to the purchase amount divided by

the liquidity price, and that the purchase amount would be paid before any

distribution to common stockholders.252 HCA treated the SAFEs as a dollar-for250

See Tr. 729:14‒731:7 (Prasad) (admitting that Tech100 never traded at a discount and that Ramadurgam “ended up being correct” that it would trade at a premium to NAV); see id. at 707:17‒708:5 (acknowledging that Tech100 went public on March 26, 2024, never traded at a discount to NAV, always traded at a premium, and peaked at an 1,800% premium to NAV); id. at 708:11‒709:6 (acknowledging Madsen’s calculation of a 387% average premium excluding the first-week peak).

251

HCA Report at 4, 47‒50, 69.

252

Id. at 49.

dollar debt claim, even though no interest applied to the SAFEs, they had no

repayment schedule, and no fixed maturity.

The SAFEs deduction left approximately $3 million of value for the common

equity.253 That result is revealing. After valuing Destiny as a going concern and

adding its Tech100 interest, the HCA Report’s SAFEs deduction resulted in a

common equity value that roughly tracked cash on hand, leaving minimal

incremental value for Destiny’s asset management business, its Tech100 thesis, or

its prospects.254 HCA divided the common equity value by 15,470,544 shares

outstanding. 255 That yielded a value of $0.19 per share on a controlling, marketable

basis. 256 HCA then applied a combined 28% discount to the Class A and Class B

shares, consisting of a 10% discount for lack of control and a 20% discount for lack

of marketability. 257 For the Class C shares, HCA applied a combined 24% discount,

consisting of a 5% discount for lack of control and a 20% discount for lack of

marketability.258 HCA concluded that the fair market value of the Class A and

253

Id. at 49, 69; Tr. 710:1‒18 (Prasad) (indicating that after accounting for the SAFE waterfall, the resulting common equity value was approximately $3 million and that this was the amount of cash Destiny had on hand at the time).

254

HCA Report at 47‒50; see also Post-Trial Arg. at 8:1‒7.

255

HCA Report at 4, 14, 50, 69.

256

Id. at 4, 50, 69.

257

Id. at 50, 69.

258

Id. at 50, 69.

Class B shares was $0.14 per share and that the fair market value of the Class C

shares was $0.15 per share. 259 Those were the values that the Board adopted at the

Special Meeting. They are also the values that Defendants rely on to prove fair price.

Adjustments

HCA then made additional adjustments. The HCA Report’s narrative stated

that, after deducting debt, HCA “applied a control premium of 20.0%” to calculate

equity value on a controlling, marketable basis. 260 The valuation schedule, however,

shows “Control Premium @ 0.0%” and applies no control premium adjustment.261

At his deposition, Frecka testified that the reference to a 20% control premium was

a drafting error and that HCA had “concluded that no control premium was

warranted.” 262 But Frecka did not testify at trial. Based on Prasad’s active

involvement in HCA’s valuation work, the assertion that the reference to a 20.0%

control premium was a typo rests on weak grounds. Prasad and Amoa explicitly

259

Id. at 50, 69.

260

Id. at 46.

261

Id. at 47. Defendants acknowledged the disconnect between the Report’s narrative and its schedule, characterizing it as a mistake in implementing the valuation model. See Tr. 858:18‒22 (Lesovitz) (testifying that the control premium discussion was a text mistake that did not flow into the HCA’s calculations); see also Post-Trial Arg. at 51:11‒17. But that explanation does not cure the problem because the HCA Report was the valuation adopted for the Transaction, and it did not attempt to address the disconnect between the narrative and the schedule.

262

Frecka Dep. 211:16‒25; id. at 315:3‒4 (“This 20% is erroneous. It should not have been in there.”); id. at 318:16-18 (“There was a drafting error that said we applied a control premium. In fact, we did not apply a control premium.”).

requested that Frecka not share the draft report before their Zoom meeting.263

Following the Zoom meeting, HCA did not share the draft report for an additional

ten days.264 The court concludes that HCA’s initial draft report applied a 20%

control premium, but that HCA removed the premium from the valuation schedule

after the Zoom meeting while leaving the corresponding narrative unchanged. The

change inured to Prasad’s benefit, and the HCA Report offers no explanation for it.

Applying the 20% control premium described in the narrative would have

increased HCA’s total equity value by approximately 2.5%, and the residual

common equity value after the SAFE deduction by approximately 6.7%. HCA’s

narrative described a control premium analysis; Appendix I to the HCA Report

included a discussion of control premiums, and the final schedule applied no upward

adjustment while applying discounts for lack of control and lack of marketability.265

That asymmetry is significant. HCA did not increase value for control, despite

describing its conclusion as controlling and marketable. It then reduced the value

263

See JX 248 at 1‒2. The version of the report that HCA discussed with Prasad and Amoa during the October 5 or 6, 2023, virtual meeting is not in the record. 264

See JX 254 at 1. There are no material changes between the draft report HCA shared on October 15, 2023, and the final report HCA sent on November 8. Compare JX 254, with HCA Report.

265

HCA Report at 46‒47, 53‒55; see also Frecka Dep. 312:12‒313:25 (“Appendix I lays out some information about control premiums and discounts, so I feel it’s appropriate to include [A]ppendix I regardless. The erroneous part was stating that we applied a 20% control premium. That’s not factually correct.”).

for lack of control and lack of marketability. HCA valued Ramadurgam’s shares as

if he were voluntarily selling an illiquid minority block to a third party. In a

controller-driven cash-out, that approach allowed the controller to benefit from the

minority’s lack of control and lack of liquidity, which, in turn, enabled the cash-out.

See Cavalier Oil Corp. v. Harnett, 564 A.2d 1137, 1145 (Del. 1989) (“[T]o fail to

accord to a minority shareholder the full proportionate value of his shares imposes a

penalty for lack of control, and unfairly enriches the majority shareholders who may

reap a windfall from the appraisal process by cashing out a dissenting shareholder,

a clearly undesirable result.”).266

The court gives the HCA Report little to no weight. HCA’s work relied

exclusively on information supplied by the conflicted side of the Transaction, and

its weakly supported valuation choices reduced the value available to the cashed-out

stockholders. The HCA Report’s most critical choices all moved in the same

direction. HCA selected a revenue multiple below the median despite recognizing

upside consideration, failed to apply the control premium described in its narrative,

266

This was not the only error in the HCA Report that Defendants minimize as a “typo” or “drafting error.” Defs.’ Answering Br. 9. The HCA Report represented that management had only projected “modest AUM growth in the future (approximately 2.5% per year).” HCA Report at 44. But, in fact, Prasad’s commentary projected a 2.5% quarterly growth rate. JX 239 at 1. Defendants insist this error did not “flow through” into HCA’s analysis, although Plaintiff’s expert disagrees. See Tr. 779:1‒14 (Madsen). Whether this was another typo or not, it further undermines the reliability of the HCA Report and fits a broader pattern of HCA’s discretionary choices consistently moving Destiny’s value downward.

excluded and discounted substantial Tech100 value, deducted the SAFEs in full, and

then applied minority and marketability discounts. Those choices produced a value

that reflected the controller’s desired transaction structure more than a reliable

measure of what Ramadurgam’s equity was worth. The court does not find that

every methodological choice HCA made was improper. Destiny was a young

company, had a limited operating history, was not profitable, and presented risks

that a valuation professional could reasonably consider. But the HCA Report, as a

whole and in the context of this controller cash-out, does not prove that Ramadurgam

received a price within a range of fairness.

ii. The expert evidence

Each side’s damages expert confirmed that the HCA Report’s valuation did

not reflect a fair price for Ramadurgam’s shares. Defendants offered Joseph

Lesovitz to support the HCA Report. 267 Plaintiff offered Eric Madsen, who

performed his own analysis. 268 The court need not adopt either expert’s opinion

wholesale. The relevant question remains whether Defendants proved that the

Transaction’s price fell within a range of fairness.

Lesovitz’s opening report provides limited independent support for

Defendants’ fair price position. Lesovitz did not perform his own valuation. Instead,

267

JX 459 (“Lesovitz Report”) at 1.

268

JX 458 (“Madsen Report”) ¶ 6.

he reviewed the HCA Report and opined that HCA’s methodology and calculations

were reasonable.269 He agreed with HCA’s use of the guideline public company

method, its downward adjustments to the selected multiples and metrics, its

deduction of the SAFE purchase amount, and its discounts for lack of control and

lack of marketability.270

The court finds that Lesovitz’s rebuttal analysis is more helpful, but it weighs

against Defendants. 271 In rebuttal, Lesovitz criticized Madsen’s valuation as

“overstated, speculative, and cannot be relied upon.”272 He then presented what he

called the “Corrected Madsen Report.” That draft did not reflect a standalone

valuation of Destiny. Rather, Lesovitz accepted the general structure of Madsen’s

analysis for purposes of rebuttal and changed a series of inputs to reflect Defendants’

criticisms of Madsen’s assumptions. 273 Lesovitz adjusted Madsen’s guideline

company set, lowered the selected multiples, weighted the AUM multiple more

heavily than the revenue multiple, reduced the control premium and the Tech100

access premium, accounted for the 700,000-share giveaway, and deducted the SAFE

269

Lesovitz Report at 6‒7, 11‒12.

270

Id. at 7‒11.

271

JX 461 (“Lesovitz Rebuttal Report”).

272

Id. at 48.

273

Id. at 31‒32, 45‒49; Tr. 871:24‒874:17 (Lesovitz) (describing the “Corrected Madsen” valuation); id. at 922:19‒923:20 (Lesovitz) (acknowledging that he did not perform his own independent “cover-to-cover” valuation).

purchase amount.274 Even after those defense-favorable corrections, Lesovitz

calculated a 100% equity value of $6,770,773 and a value of $2,128,572 for

Ramadurgam’s 31.44% interest.275 That is approximately a 200% increase over

HCA’s valuation.276

The court does not treat Lesovitz’s corrected Madsen analysis as the fair value

of Destiny. But it is probative because it shows that even after accepting many of

Defendants’ criticisms of Madsen, the resulting value remained materially above the

price adopted for the Transaction. For example, Lesovitz did not subscribe to HCA’s

decision not to apply a control premium. 277 Rather, he opined that “the most

appropriate control premium is approximately 28%” as of November 9, 2023.278

That result undermines Defendants’ contention that the Transaction price was well

within a range of fairness.

Madsen’s valuation points in the same direction, though the court does not

adopt his ultimate number.279 Madsen used a market approach to value Destiny’s

274

Lesovitz Rebuttal Report at 46‒47.

275

Id. at 47‒48.

276

See Defs.’ Post-Trial Demonstrative at 30.

277

Tr. 943:19‒24 (Lesovitz).

278

Lesovitz Rebuttal Report at 7. That adjustment alone would have increased HCA’s residual common-equity value after the SAFE deduction by approximately 9.4%. See Defs.’ Post-Trial Demonstrative at 30.

279

Madsen Report ¶ 7.

asset management business and an asset approach to value Destiny’s Tech100

interest. 280 Madsen valued Destiny substantially above the cash-out price.281 As of

November 9, 2023, he concluded that a 100% equity interest in Destiny was worth

$32.4 million and that Ramadurgam’s 31.44% interest was worth $10.2 million.282

He identified two principal sources of value: Destiny’s management fees earned by

its wholly owned subsidiary, Advisors, and Destiny’s ownership of Tech100

shares.283

Madsen’s analysis usefully identifies the value drivers that the HCA Report

discounted or missed. He focused on Destiny’s access premium business thesis, its

Tech100 stake, the economics of the share giveaway, the absence of an actual control

premium in HCA’s model, and the effect of deducting the SAFEs in full. Those

issues go to the core of whether HCA’s price fairly captured Destiny’s value.

At the same time, the court does not adopt Madsen’s $32.4 million valuation

for purposes of finding the fair price. Madsen’s analysis required several judgment

calls that resolved uncertainty in Plaintiff’s favor.284 The access premium analysis

280

Id. ¶ 32.

281

Compare id., with HCA Report at 4.

282

Madsen Report ¶¶ 7, 123.

283

Id. ¶ 19; Tr. 735:10‒20 (Madsen).

284

Defendants’ principal attack on Madsen focused on the degree to which his analysis relied on post-valuation-date information and aggressive assumptions. See Post-Trial Arg. at 56:16-59:23.

relied substantially on post-valuation date trading evidence.285 His selection of 75th

percentile multiples reflected a judgment that Destiny’s growth prospects, smaller

fund size, and direct investment in Tech100 justified a valuation above the guideline

company median.286 And his treatment of the SAFEs emphasized their practical

economic characteristics and Prasad’s incentives, rather than assigning full weight

to the formal priority rights that could arise in a liquidity event. 287

Those choices responded to real features of Destiny’s business and capital

structure. But taken together, they resolve too much uncertainty in Plaintiff’s favor.

The court therefore credits Madsen’s analysis as additional evidence against the

HCA Report, rather than adopting it as Destiny’s fair value estimate.288

In conclusion, the expert evidence leaves Defendants short of their burden.

iii. Defendants failed to prove a fair price.

Defendants have failed to prove fair price. Their principal evidence was the

HCA Report—a flawed and one-sided valuation commissioned by counsel for the

controlling stockholder, prepared from information supplied by the conflicted side

of the Transaction who steered HCA’s conclusions downwards. The court gives the

285

Madsen Report ¶¶ 77‒78, 91, 93, 97‒101.

286

Id. ¶¶ 71, 124‒26, 136, 140, 149‒150; id. Exs. 1.1, 2.1, 2.3.

287

Madsen Report ¶¶ 102‒114; id. Ex. 3.3.

288

Defendants also pointed to Forge’s later acquisition of another company as real world evidence that Madsen’s valuation was too aggressive. Post-Trial Arg. at 52:17‒54:18. The court declines to credit that transaction as reliable valuation evidence.

HCA Report little to no weight. Defendants supplemented the HCA Report with

Lesovitz’s testimony, but Lesovitz did not perform a standalone valuation, and his

rebuttal exercise produced a value materially above the Transaction price. Thus,

Defendants’ expert evidence did not save the HCA Report either.

This case is unlike Trados, where the court found an unfair process but

concluded that the common stock had no economic value. See Trados, 73 A.3d at

76‒78. Ramadurgam’s shares were not valueless. They represented a substantial

equity interest in a going concern entity that managed Tech100 and held a

meaningful stake in Tech100. Defendants did not prove that the reverse-forward

split gave him the substantial equivalent in value of what he had before the

Transaction.

Therefore, the fair price outcome weighs against Defendants.

c. Unitary determination

“Although often applied as a bifurcated or disjunctive test, the concept of

entire fairness requires the court to examine all aspects of the transaction in an effort

to determine whether the deal was entirely fair.” Tremont, 694 A.2d at 432 (citing

Weinberger, 457 A.2d at 711). “The two components of the entire fairness concept

are not independent, but rather the fair dealing prong informs the court as to the

fairness of the price obtained through that process.” Valeant Pharms. Int’l v. Jerney,

921 A.2d 732, 746 (Del. Ch. 2007). Defendants bear the burden of proving entire

fairness. “When assigned the burden of persuasion, this test obligates the directors,

or their surrogates, to present evidence which demonstrates that the cumulative

manner by which it discharged all of its fiduciary duties produced a fair transaction.”

Tremont, 694 A.2d at 432 (citing Cinerama, 663 A.2d at 1163). The court “must

carefully analyze the factual circumstances, apply a disciplined balancing test to its

findings, and articulate the bases upon which it decides the ultimate question of

entire fairness.” Ams. Min., 51 A.3d at 1248.

Defendants failed to prove entire fairness on both the dealing and price

elements. Under the unitary entire fairness inquiry, Defendants failed to prove that

the Transaction was entirely fair to Ramadurgam. 289 Prasad breached his duty of

loyalty as a controlling stockholder and director. Kumar and Licona also breached

their fiduciary duties, including the duty of loyalty.

The duty of loyalty is not limited to self-dealing. It “also encompasses cases

where the fiduciary fails to act in good faith.” Stone ex rel. AmSouth Bancorporation

v. Ritter, 911 A.2d 362, 370 (Del. 2006). If “directors fail to act in the face of a

289

Because Destiny’s certificate of incorporation contains an exculpatory provision, a finding that the Transaction was not entirely fair does not, standing alone, establish Kumar and Licona’s personal liability for damages. The court must identify a non-exculpated breach as to each director. See In re Cornerstone Therapeutics Inc. S’holder Litig., 115 A.3d 1173, 1179‒80 (Del. 2015) (holding that a plaintiff seeking damages must plead a non-exculpated claim against an exculpated director “regardless of the underlying standard of review,” including entire fairness); id. at 1182 (explaining that an exculpated director may remain liable where the record supports disloyalty, lack of independence, or bad faith).

known duty to act, thereby demonstrating a conscious disregard for their

responsibilities, they breach their duty of loyalty by failing to discharge that

fiduciary obligation in good faith.” Id.

Establishing bad faith requires more than showing an inadequate process or

gross negligence. See In re Walt Disney Co. Deriv. Litig., 906 A.2d 27, 65 (Del.

2006) (explaining that “grossly negligent conduct, without more, does not and

cannot constitute a breach of the fiduciary duty to act in good faith”). Rather, bad

faith is shown where “the fiduciary intentionally fails to act in the face of a known

duty to act, demonstrating a conscious disregard for his duties.” Id. at 67 (quoting

In re Walt Disney Co. Deriv. Litig., 907 A.2d 693, 755 (Del. Ch. 2005), aff’d, 906

A.2d 27 (Del. 2006)). As our Supreme Court cautioned in Lyondell Chemical Co.

v. Ryan, “there is a vast difference between an inadequate or flawed effort to carry

out fiduciary duties and a conscious disregard for those duties.” 970 A.2d 235, 243

(Del. 2009). “Only if [directors] knowingly and completely failed to undertake their

responsibilities would they breach their duty of loyalty.” Id. at 243–44. That is what

happened here.

Kumar and Licona were not merely uninformed as to material information;

they were willfully blind. They knew that Prasad stood on both sides of the

Transaction. In fact, they testified that they understood the Transaction to be the

solution to the co-founder dispute by eliminating Ramadurgam’s equity. They

welcomed their appointment to the Board just two days before the Special Meeting,

with no concern about their ability to attend a critical decision-making moment for

the body they had joined, because they saw their role as mere executors of Prasad’s

scheme. Despite knowing the circumstances, they approved the Transaction and

explained that the goal was to eliminate “dead equity” and “clean[] up the cap

table.”290 Neither of them was concerned by the terms of the Transaction, as long as

there was an indemnification provision in the certificate of incorporation. They did

not even pretend to act as functioning directors, as evidenced by their total absence

of questions or discussion during the Special Meeting.

Defendants’ “dead equity” litigation theory does not save Kumar and Licona.

Defendants have argued that Prasad believed that Ramadurgam was no longer

contributing meaningfully to Destiny and that his continued ownership created

governance and incentive problems. At most, that theory explains Prasad’s motive,

but there is no persuasive evidence that either Kumar or Licona inquired. Rather, it

is undisputed that neither of them sought to ask Ramadurgam about Prasad’s story.

None of the Individual Defendants made any effort to discharge their fiduciary

responsibilities in the case of a conflicted controller transaction. Accordingly, the

Tr. 331:17‒19 (Kumar); id. at 266:19‒22 (Licona); see also id. at 358:3‒8, 418:17‒20 290

(Kumar).

court finds that the Transaction was not entirely fair to Ramadurgam, and that the

Individual Defendants breached their duty of loyalty.

2. The Restitutionary Remedy

“In an entire fairness case, the matter only proceeds to the remedial phase if

the transaction fails the test of fairness.” Reis, 28 A.3d at 466. The Transaction

failed that test. The court’s remedial authority is broad. The Court of Chancery “has

broad power to fashion an equitable remedy.” Unitrin, Inc. v. Am. Gen. Corp., 651

A.2d 1361, 1391 (Del. 1995). “[I]n a breach of the duty of loyalty context . . . , the

Court of Chancery’s powers [are] as ‘complete to fashion any form of equitable and

monetary relief as may be appropriate.’” In re Tesla, Inc. Deriv. Litig., 351 A.3d

1005 (Del. 2025) (ORDER) (quoting Gotham P’rs, L.P. v. Hallwood Realty P’rs,

L.P., 817 A.2d 160 (Del. 2002)). That power permits the court to tailor relief to the

wrong, so long as the remedy rests on an evidentiary basis. See In re Mindbody,

Inc., S’holder Litig., 332 A.3d 349, 407 (Del. 2024).

The remedy also must reflect the nature of the breach. “Delaware law dictates

that the scope of recovery for a breach of the duty of loyalty is not to be determined

narrowly.” Thorpe by Castleman v. CERBCO, Inc., 676 A.2d 436, 445 (Del. 1996).

“An appropriate remedy must take into account the requirement ‘that a fiduciary not

profit personally from his conduct, and that the beneficiary not be harmed by such

conduct.’” Metro Storage Int’l LLC v. Harron, 275 A.3d 810, 860 (Del. Ch. 2022)

(quoting Thorpe, 676 A.2d at 445).

Here, those principles guide the court toward a restitutionary remedy.

“Broadly speaking, restitution means restoration.” 2 Donald J. Wolfe, Jr. & Michael

A. Pittenger, Corporate and Commercial Practice in the Delaware Court of

Chancery § 16.01[b] (2d ed. 2025). “All restitutionary remedies operate to restore

to one party the benefit unjustly conferred upon another in a transaction.” Id.

Restitution differs from ordinary compensatory damages because it focuses on the

defendant’s gain rather than the plaintiff’s loss. “Restitution measures the remedy

by the defendant’s gain and compels the defendant to disgorge that gain, while

damage awards typically are designed to compensate the plaintiff for loss and are

measured by the amount of that loss.” Id.

Restitution can take different forms. It may be “in specie,” meaning

restoration of specific property, or it may be “substitutionary,” meaning restoration

of money as a substitute for the benefit received. Id. Where “the right to be enforced

is one cognizable only in equity (e.g., fiduciary duty), the Court of Chancery may

grant restitutionary relief—whether substitutionary or in specie—to rectify any

unjust enrichment resulting from violation of the right.” Id.

This case calls for restitution in specie.291 The wrong was not only that

Ramadurgam did not receive a fair price for his shares. The wrong was that Prasad

used the Transaction to obtain and retain an ownership benefit that, in equity, he

should not keep. That benefit is specific and identifiable: the equity interest, or its

substitute form, that Ramadurgam would have retained absent the Transaction.

a. Rescission is not the proper restitutionary remedy.

Plaintiff asks the court to return Ramadurgam and Prasad to their preTransaction equity ratios by requiring Prasad to transfer to Ramadurgam a portion

of his membership interest in Destiny from his own holdings. 292 Plaintiff argues that

Prasad holds enough equity to return Ramadurgam’s interest without disturbing

third-party interests. 293 Defendants argue that rescission is unavailable because the

291

The historical phrase restitutio in integrum captures the same restorative impulse. One court, tracing the term’s etymology, explained that “Restitutio” means “a restoring.” People v. Good, 282 N.W. 920, 24 (Mich. 1938). In Roman law, restitutio in integrum referred to an extraordinary equitable intervention, granted causa cognita, by which a magistrate could set aside the legal effect of an act that operated inequitably and restore the prior juridical state as nearly as possible. See generally Giuliano Cervenca, Studi vari sulla «restitutio in integrum» (1965) (It.).

292

Pl.’s Opening Br. 48‒51; Pl.’s Answering Br. 31‒34.

293

Pl.’s Opening Br. at 50.

Transaction has been followed by later equity grants, option exercises, and other

changes to Destiny’s capitalization. 294

The court agrees that rescission is not a viable remedy here. Rescission “refers

to the avoidance of a transaction or the cancellation of the deal.” 2 Wolfe &

Pittenger, Corporate and Commercial Practice § 16.01[b]. It cancels or unwinds

the challenged transaction and “requires that all parties to the transaction be restored

to the status quo ante, i.e., to the position they occupied before the challenged

transaction.” Strassburger v. Earley, 752 A.2d 557, 578 (Del. Ch. 2000). Rescission

is a poor fit here because the present transaction is “too involved to undo.”

Weinberger, 457 A.2d at 714. The Delaware Supreme Court’s recent Tesla decision

reinforces the view that rescission is improper when the court cannot restore the

parties to the status quo ante. See Tesla, 351 A.3d at 1005.

By contrast, “restitution itself involves the return of what one or both parties

gained through an avoided transaction to prevent unjust enrichment.” 2 Wolfe &

Pittenger, Corporate and Commercial Practice § 16.04. Rescission and restitution

often appear together because unwinding a transaction may require each side to

return what it received. But they are not the same remedy. Rescission avoids the

transaction, whereas restitution restores the benefit. That distinction controls here.

294

Defs.’ Opening Br. 45‒47; Defs.’ Answering Br. 24‒27.

Plaintiff’s requested remedy does not require the court to invalidate every aspect of

the Transaction. It requires the court to identify the benefit Prasad obtained through

the Transaction and determine whether equity permits him to retain it.

b. A constructive trust is the proper restitutionary

remedy.

A constructive trust supplies the appropriate form of restitution in specie. “A

constructive trust is simply a form of restitution in specie.” B.A.S.S. Gp., LLC v.

Coastal Supply Co., 2009 WL 1743730, at *7 (Del. Ch. June 19, 2009) (citation

modified). It is “an equitable remedy of great flexibility and generality.” McMahon

v. New Castle Assocs., 532 A.2d 601, 608 (Del. Ch. 1987). “The principle is that

where a person holds property in circumstances in which, in equity and good

conscience, it should be held or enjoyed by another, he will be compelled to hold the

property in trust for that other.” Cannon v. Sisneros, 1987 WL 16286, at *2 (Del.

Ch. Aug. 31, 1987) (citing Harold Greville Hanbury & Ronald Harling Maudsley,

Hanbury and Maudsley Modern Equity 301 (Jill E. Martin ed., 12th ed. 1985)).

Thus, the doctrine is suited to a case in which the court need not unwind the

Transaction in full, but must prevent Prasad from retaining ownership benefits

obtained through fiduciary misconduct. The Delaware Supreme Court precedent

states the same principle: “The doctrine of constructive trust effectuates the

principle of equity that one who would be unjustly enriched, if permitted to retain

property, is under an equitable duty to convey it to the rightful owner.” Hogg v.

Walker, 622 A.2d 648, 652 (Del. 1993). A constructive trust “is imposed when a

defendant’s fraudulent, unfair or unconscionable conduct causes him to be unjustly

enriched at the expense of another to whom he owed some duty.” Adams v.

Jankouskas, 452 A.2d 148, 152 (Del. 1982). The doctrine is particularly apt where

fiduciary misconduct produces ownership of specific property. In Adams, the Court

quoted Pomeroy’s formulation that constructive trusts reach “acts or omissions in

violation of fiduciary obligations.” Id. at 152 n.4 (citing 1 John Norton Pomeroy,

Pomeroy’s Equity Jurisprudence and Equitable Remedies § 166, at 210–11 (5th ed.

1941)). Under that formulation,

[i]f one party obtains the legal title to property, not only by fraud or by

violation of confidence or of fiduciary relations, but in any other

unconscientious manner, so that he cannot equitably retain the property

which really belongs to another, equity carries out its theory of a double

ownership, equitable and legal, by impressing a constructive trust upon

the property in favor of the one who is in good conscience entitled to it.

Id. (citing 1 Pomeroy, Pomeroy’s Equity Jurisprudence and Equitable Remedies

§ 166, at 210–11). That is the situation here.

Prasad used the Transaction to obtain and retain beneficial ownership of the

equity interest that Ramadurgam would have held absent Defendants’ fiduciary

breaches. Neither the process nor the price of the Transaction met the entire fairness

standard. Prasad breached his duty of loyalty as a controller and director. Kumar

and Licona approved the Transaction in bad faith. The result was that Prasad

emerged holding the ownership benefit generated by the Transaction. Equity will

not permit Prasad to retain that benefit. The property at issue is identifiable.

Plaintiff’s requested share-transfer remedy identifies the ownership interest that

would restore the pre-Transaction relative equity position using Prasad’s own

holdings. Plaintiff calculated that the remedy was 675,182 Class A shares,

3,375,912 Class B shares, and 3,375,912 Class C shares. 295 Defendants dispute

rescission and argue that later events changed Destiny’s capitalization, but their

argument does not defeat a proprietary restitutionary remedy directed at the benefit

that Prasad personally retained. In fact, Defendants explicitly state that Destiny’s

conversion to a limited liability company “does not affect the [c]ourt’s ability to

grant any of the relief sought by Ramadurgam,” including “award[ing] the

appropriate number and class of units in the limited liability company instead of

shares.”296

A constructive trust in this case avoids the overbreadth of rescission and the

inadequacy of money damages. It does not cancel the Transaction and does not

disturb later equity grants to others. Instead, it imposes a targeted, equitable remedy

that requires Prasad to restore Ramadurgam to the relative equity position he was

295

Pl.’s Opening Br. 50‒51.

296

Defs.’ Answering Br. 38; see also Post-Trial Arg. at 74:24‒75:2 (Defendants stating that, if the court decided for a restitutionary remedy, the sole difference related to the conversion to a limited liability company “would be [between] units and shares,” and that the conversion was “not meant . . . to trick the court in some way” as the court “ha[s] the full power to do all the remedies”).

deprived of because Defendants breached their fiduciary duties. As McMahon

recognized, when “the defendant still has the property” and “the property has

increased in its value while the defendant held it,” the plaintiff may “rely upon the

proprietary remedy of a constructive trust.” 532 A.2d at 608.

Therefore, the court imposes a constructive trust on Prasad’s ownership

interests that are traceable to the equity that Ramadurgam would have retained

absent the Transaction. Because Destiny has since converted from a corporation to

a limited liability company, the trust will attach not to shares but to any substitute

membership interests, thereby restoring Ramadurgam’s ownership to 36.5% of

Destiny’s equity.

B. The Claim Under Section 155 of the DGCL

Plaintiff’s third cause of action is brought under Section 155 of the DGCL.

As this court articulated in Reis, “a stockholder who seeks to challenge the board’s

decision [to pay cash in lieu of fractional shares] must plead and subsequently prove

that the board acted wrongfully. A reviewing court’s role is to ensure that the

corporation complied with the statute and acted in accordance with its fiduciary

duties.” 28 A.3d at 456–57. Having determined that the Transaction failed entire

fairness review and having awarded equitable relief for the same fiduciary wrong,

the third cause of action under Section 155 of the DGCL does not require separate

relief.

C. Attorneys’ Fees

“Delaware generally follows the American Rule, under which litigants are

responsible for their own attorneys’ fees, regardless of the outcome of the lawsuit.”

Bako Pathology LP v. Bakotic, 288 A.3d 252, 280 (Del. 2022) (quoting Alaska Elec.

Pension Fund v. Brown, 988 A.2d 412, 417 (Del. 2010)). But “it is also well

established that [the Court of Chancery], ‘under [its] equitable powers, has latitude

to shift attorneys’ fees.’” Scion Breckenridge Managing Member, LLC v. ASB

Allegiance Real Est. Fund, 68 A.3d 665, 686 (Del. 2013) (citing Gatz Props., LLC

v. Auriga Cap. Corp., 59 A.3d 1206, 1222 (Del. 2012)).

Under the bad faith exception to the American Rule, the court may shift fees

“where the underlying (pre-litigation) conduct of the losing party was so egregious

as to justify an award of attorneys’ fees as an element of damages.” Arbitrium

(Cayman Is.) Handels AG v. Johnston, 705 A.2d 225, 231 (Del. Ch. 1997), aff’d,

720 A.2d 542 (Del. 1998); see also Hardy v. Hardy, 2014 WL 3736331, at *17 (Del.

Ch. July 29, 2014) (“[A]n exception to the American Rule exists where the party

against whom attorneys’ fees are sought to be assessed acted in bad faith . . . in the

conduct that gave rise to the litigation.”); Black v. Staffieri, 2014 WL 814122, at *3

(Del. Feb. 27, 2014) (indicating that the court may shift fees “when a party’s

prelitigation conduct is so egregious that it warrants fees as a form of damages.”).

Of course, “not every case of intentional fiduciary wrongdoing justifies feeshifting.” Hardy, 2014 WL 3736331, at *17 (citation modified). “[A]n award of

attorneys’ fees is ‘unusual relief.’” Arbitrium, 705 A.2d at 230 (citing Weinberger,

517 A.2d at 656). Rather, “this quite narrow exception is applied in only the most

egregious instances of fraud or overreaching.” Id.

“To award fees under the bad faith exception, the party against whom the fee

award is sought must be found to have acted in subjective bad faith. A finding of

bad faith involves a higher or more stringent standard of proof, i.e., ‘clear

evidence.’” Id. at 231–32. “Some actions may objectively be so egregiously

unreasonable, however, that they seem essentially inexplicable on any ground other

than [subjective] bad faith.” Allen v. Encore Energy P’rs, L.P., 72 A.3d 93, 107

(Del. 2013) (citation modified).

1. Defendants’ pre-litigation conduct was glaringly egregious

and the product of unusually deplorable behavior.

This case does not involve an ordinary fiduciary breach. Prasad initiated the

Transaction after Ramadurgam demanded governance protections in exchange for

Prasad’s proposed equity grant. Importantly, the contemporaneous evidence

demonstrates that Ramadurgam was open to considering Prasad’s request to increase

his equity stake, but he demanded one of the common monitoring devices for

policing conflicts involving controlling stockholders—the appointment of

independent directors. 297 The disproportionate counterreaction that followed

Ramadurgam’s demands was animated by Prasad’s deliberate abuse of control to

remove Ramadurgam from the Company’s capital structure and seize his cofounder’s equity. See, e.g., Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del.

1971) (describing self-dealing as a situation where the controller receives a benefit

“to the exclusion of, and detriment to, the minority stockholders.”).

This case is strikingly similar to In re Nine Systems Corporation Shareholders

Litigation, where this court equitably shifted fees after finding that defendants

“utterly failed to understand their fiduciary relationship . . . , knowingly excluded

from the decision-making process a director who represented a group of minority

shareholders, effected the recapitalization through a grossly inadequate process, and

sought to avoid full and fair communications with the [c]ompany’s stockholders.”

2015 WL 2265669, at *2 (Del. Ch. May 7, 2015) (citation modified). Prasad

likewise engineered a controller cash-out to remove Ramadurgam from the cap table,

concealed the plan from him until the moment of approval, and secured approval

from directors he had just appointed (and only disclosed 30 minutes before the board

meeting). Kumar and Licona intentionally disregarded their duties as Destiny’s

directors, made no inquiry into the terms of the Transaction or the resolutions

297

Lucian A. Bebchuk & Assaf Hamdani, Independent Directors and Controlling Shareholders, 165 U. Pa. L. Rev. 1271, 1280 (2017).

submitted for their approval, and enabled Prasad’s disloyal plan, which they simply

rubber-stamped. When Ramadurgam sought to resolve the matter, Prasad dared

Ramadurgam to sue him, citing the expense of litigation.298

These facts also support a finding beyond the elements of the underlying

loyalty claims, as they demonstrate a purposeful use of corporate control to

appropriate Ramadurgam’s equity and a process deliberately structured to prevent

the protections that might have constrained Prasad’s conflict. The subjective

element distinguishes this case from an ordinary intentional fiduciary breach.

Therefore, the court concludes that the pre-litigation conduct independently

warrants fee-shifting as an element of equitable relief. Awarding fees is necessary

to avoid leaving Ramadurgam to bear the cost of litigation required to remedy a

deliberate breach of loyalty. See William Penn P’ship v. Saliba, 13 A.3d 749, 759

(Del. 2011) (affirming entire fairness finding against conflicted managers of a

limited liability company who manipulated a sale process and upholding fee-shifting

as an equitable remedy for faithless pre-litigation conduct, even though the courtappointed appraisal yielded no damages award) (“Because the Court of Chancery

298

JX 292 (“There is no possible claim that would provide you any continued equity position. Given that, candidly I’m not moved by any threat of litigation. It’s incredibly unlikely that any claim you make would provide a greater monetary value than was already provided. In fact, not only would I/we successfully prevail, the cost of pursuing an extended, public litigation would certainly exceed any potential monetary objectives you may have.”).

based its decision to award attorneys’ fees and costs on the faithless conduct of the

[individual defendants], the decision was neither arbitrary nor capricious. The Court

of Chancery based its decision on conscience and reason by upholding Delaware law

and discouraging disloyalty.”).

The Delaware Supreme Court’s recent decision in Leo Investments Hong

Kong Ltd. v. Tomales Bay Capital Anduril III, L.P., confirms that Saliba remains an

unusual equitable fee-shifting case and does not authorize fees whenever a fiduciary

breach is found. --- A.3d ----, 2026 WL 1993637, at *13‒14 (Del. July 10, 2026).

In Leo Investments, the Court reversed an award of nearly $16 million in fees that

was due solely to a defendant’s pre-litigation misrepresentation to the plaintiff,

which resulted in nominal damages of $1.00. The Court distinguished that case from

Saliba, where faithless fiduciaries orchestrated a self-interested sale process, failed

to prove entire fairness, and left successful plaintiffs without a traditional damages

award solely because a later appraisal showed the property at issue was valued at a

lower amount than the sale price.

The factual findings here are closer to those found in Saliba. Ramadurgam

prevailed on his claims. The Individual Defendants failed to prove entire fairness.

The Transaction eliminated Ramadurgam’s equity through a controller-designed

cash-out. And the court has found that the Individual Defendants engaged in

glaringly egregious conduct, which was the product of “unusually deplorable

behavior.” Macrophage Therapeutics, Inc. v. Goldberg, 2021 WL 2582967, at *19

(Del. Ch. June 23, 2021); see id. (explaining that “not every proven breach of the

duty of loyalty will justify an award of attorneys’ fees as damages.”); see also Cantor

Fitzgerald, L.P. v. Cantor, 2001 WL 536911, at *4 (Del. Ch. May 11, 2001) (“fees

may be awarded against a defendant where ‘the action giving rise to the suit

involve[s] bad faith, fraud, conduct that was totally unjustified, or the like’ and

attorney’s fees are considered an appropriate part of damages.’”) (quoting Barrows

v. Bowen, 1994 WL 514868, at *2 (Del. Ch. Sept. 7, 1994)); Barrows, 1994

WL 514868, at *2 (“I cannot conclude that defendants were engaged in a deliberate

scheme to defraud or to overreach.”).

Therefore, fee-shifting here would allocate the costs of successful litigation to

fiduciaries whose faithless pre-litigation conduct made the litigation necessary. See

Leo Invs., --- A.3d ----, 2026 WL 1993637, at *13‒14.

Because the court concludes that fee-shifting is warranted based upon the

individual defendants’ egregious pre-litigation conduct, the court need not reach the

issue of whether fee-shifting is warranted based upon bad-faith litigation conduct.

2. Defendants’ unclean hands argument fails.

Defendants argue that Ramadurgam’s request for fees is barred by unclean

hands. They point to Ramadurgam’s communications following the filing of the

Complaint, including sharing the Complaint with others and, later, text messages

containing a screenshot of the court’s remarks reflected in the post-trial transcript.299

Defendants characterize those communications as injurious.

“The equitable doctrine of unclean hands bars litigants who have acted

inequitably from seeking what might otherwise be available relief. This Court uses

the doctrine to protect the integrity of itself and those who come before it.” Tafeen

v. Homestore, Inc., 2004 WL 556733, at *6 (Del. Ch. Mar. 22, 2004), aff’d, 888 A.2d

204 (Del. 2005). “The Court of Chancery has broad discretion in determining

whether to apply the doctrine of unclean hands.” SmithKline Beecham Pharms. Co.

v. Merck & Co., 766 A.2d 442, 448 (Del. 2000). “Further, the question of unclean

hands is factual.” RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 876 (Del. 2015).

“[T]he scope of the unclean hands doctrine is limited, since it only applies when a

claimant’s misconduct is directly related to the merits of the controversy between

the parties.” 27A Am. Jur. 2d Equity § 25, Westlaw (database updated May 2026).

In this case, Ramadurgam is alleged to have shared information about the

present lawsuit with non-parties. As highlighted in this decision, most of the

allegations in the Complaint proved true, and the trial surfaced the egregiousness of

Defendants’ conduct. Even if some of Ramadurgam’s communications were illadvised, they do not bear the necessary relationship to the fiduciary breaches and

299

Defs.’ Opening Br. 63.

litigation misconduct that support fee-shifting. Neither do they warrant denying

equitable relief designed to remedy Defendants’ disloyal conduct. Therefore, the

court concludes that the doctrine of unclean hands is inapplicable here and does not

preclude the substantive relief awarded to remedy the Defendants’ fiduciary

breaches or the court’s decision to shift fees.

One qualification is necessary. Destiny paid the Transaction consideration to

Ramadurgam and to Pacific Premier Trust FBO Samvit Ramadurgam IRA.

Ramadurgam returned the funds sent to him personally, but the funds sent to his trust

have been effectively held in escrow to date. To avoid any double recovery, the

funds still retained shall be credited against the award of attorneys’ fees and

expenses.

III. CONCLUSION

Judgment is entered in favor of Ramadurgam on Counts I and II. Individual

Defendants breached their fiduciary duties and failed to prove that the Transaction

was entirely fair. The court imposes a constructive trust over Prasad’s ownership

interests so as to restore Ramadurgam’s 36.5% equity interest in Destiny to reflect

the pre-Transaction status quo. The claim asserted under Section 155 of the DGCL

does not require separate relief.

Ramadurgam is entitled to an award of his reasonable attorneys’ fees and

expenses to be paid by the Individual Defendants, subject to a credit for any

Transaction consideration retained by Ramadurgam.

The parties shall confer and submit a form of final order implementing this

decision within ten business days.

Samvit Ramadurgam v. Destiny XYZ Inc.

Authorities cited

Opinion · public domain