Mudrick Capital Management L.P. v. QuarterNorth Energy, Inc.

• Court: Court of Chancery of Delaware
• Decided: January 12, 2026
• Docket: 2024-0106-LWW
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE LORI W. WILL LEONARD L. WILLIAMS JUSTICE CENTER VICE CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734

January 12, 2026

Bradley R. Aronstam, Esquire Blake Rohrbacher, Esquire Roger S. Stronach, Esquire Kevin M. Gallagher, Esquire Benjamin M. Whitney, Esquire Matthew W. Murphy, Esquire Ross Aronstam & Moritz LLP John M. O’Toole, Esquire 1313 North Market Street, Suite 1001 Christine J. Chen, Esquire Wilmington, Delaware 19801 Elizabeth J. Freud, Esquire Kevin M. Kidwell, Esquire Benjamim O. Allen, Esquire Richards, Layton & Finger, P.A. 920 North King Street Wilmington, Delaware 19801

RE: Mudrick Capital Management L.P. et al. v. QuarterNorth Energy Inc., C.A. No. 2024-0106-LWW

Dear Counsel,

I write regarding defendant QuarterNorth Energy Inc.’s request for leave to

move for partial summary judgment.1 The plaintiffs oppose the request.2 After

considering the parties’ correspondence, the request is denied.

Summary judgment may be appropriate where “there is no genuine issue as to

any material fact and . . . the moving party is entitled to a judgment as a matter of

1 Letter Requesting Leave to Move for Partial Summ. J. (Dkt. 147) (“Def.’s Letter Req.”). 2 Letter Opposing Leave to Move for Partial Summ. J. (Dkt. 149) (“Pls.’ Opp’n Letter”). C.A. No. 2024-0106-LWW January 12, 2026 Page 2 of 4

law.”3 “There is no ‘right’ to a summary judgment.”4 The court may, in its

discretion, deny summary judgment if it decides that “it is desirable to inquire into

and develop the facts more thoroughly at trial in order to clarify the law or its

application.”5

QuarterNorth seeks partial summary judgment on three issues: (1) that

plaintiffs Mudrick Capital Management L.P. and Ellington Management Group lack

standing because they are not warrant holders; (2) that the plaintiffs’ “bad faith”

claim fails because they lack evidence showing QuarterNorth’s board was

controlled; and (3) that the warrant agreements did not mandate the use of a trading

price to determine fair market value of one QuarterNorth share. None of these issues

are suited for resolution on summary judgment.

First, motion practice is unnecessary to resolve the standing issue. The

plaintiffs concede that Mudrick and Ellington are not “Holders” under the warrant

3 Ct. Ch. R. 56(c). 4 Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002). 5 In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2014 WL 2768782, at *9 (Del. Ch. June 12, 2014). C.A. No. 2024-0106-LWW January 12, 2026 Page 3 of 4

agreements and have agreed to dismiss them as parties.6 The parties should file a

stipulation to that effect.7

Second, the bad faith dispute is best resolved after a trial. Although

QuarterNorth focuses on a purported lack of board control, the plaintiffs respond

that their claim sounds in contract rather than fiduciary duty.8 According to the

plaintiffs, the claim hinges on whether the board’s valuation determination was

“commercially reasonable” and “made in good faith” under the warrant agreements.9

Whether the board’s determination met these standards is a fact-intensive question.

Finally, it would be inefficient to explore summary judgment on the valuation

issue. QuarterNorth asserts that the warrant agreements do not “mandate” the use

of trading prices, but the plaintiffs clarify that they are arguing market data was

“commercially unreasonable” under the circumstances of this case.10 A summary

judgment ruling on whether specific inputs were mandated would be advisory

because the ultimate question of reasonableness would remain in dispute.

6 See Pls.’ Opp’n Letter 5. 7 See Def.’s Letter Regarding Req. for Leave to Move for Partial Summ. J. (Dkt. 151); Pls.’ Letter Regarding January 8 Letter (Dkt. 152). 8 Compare Def.’s Letter Req. 2-3, with Pls.’ Opp’n Letter 5. 9 Pls.’ Opp’n Letter 2-3. 10 Compare Def.’s Letter Req. 4-6, with Pls.’ Opp’n Letter 5-6. C.A. No. 2024-0106-LWW January 12, 2026 Page 4 of 4

Accordingly, the request for leave to move for partial summary judgment is

denied. IT IS SO ORDERED.

Sincerely yours,

/s/ Lori W. Will

Lori W. Will Vice Chancellor