Samvit Ramadurgam v. Destiny XYZ Inc.
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 cash-
out, 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.
2 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
1 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 pre- trial 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 “Post- Trial 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.”). 2 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
3 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 co-
founders 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.
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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 cash-
out, 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.
2 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
1 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 pre- trial 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 “Post- Trial 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.”). 2 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
3 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 co-
founders 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. 3 See JX 317 at 1. 4 See Dkt. 92; Defs.’ Answering Br. 38. 5 PTO ¶ 13. 6 Id. ¶ 29. 7 Id. ¶ 17.
4 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
8 Id. ¶¶ 18−19. 9 JX 307 (“Prospectus”) at 1, 5, 13, 17‒21, 78; JX 374 ¶ 24; JX 310 at 4. 10 Prospectus at 5. 11 PTO ¶ 15. 12 See Tr. 4:16‒5:3, 5:16‒20, 6:5‒11 (Ramadurgam); Prasad Dep. 54:11‒15.
5 and later business partners. 13 Their first venture together focused on private-
company 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
13 Tr. 7:11‒13 (Ramadurgam); id. at 495:6‒10 (Prasad). 14 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). 16 See id. at 455:10‒19 (Prasad). 17 Id. at 7:3‒5 (Ramadurgam); id. at 456:16‒457:8 (Prasad). 18 PTO ¶ 13; Tr. 6:16‒7:10 (Ramadurgam).
6 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 asset-
management division. The idea was to satisfy retail investors’ demand for Forge-
managed 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
19 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. 20 Tr. 7:14‒20, 7:24‒8:8, 11:9‒24 (Ramadurgam). 21 Id. at 8:7‒17, 11:3‒8. 22 Id. at 5:12‒13.
7 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
23 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. 24 Tr. 9:14‒17, 10:1‒2, 10:11‒20 (Ramadurgam); id. at 481:15‒16 (Prasad). 25 PTO ¶ 14. 26 Id. ¶ 29. 27 Tr. 20:4‒9 (Ramadurgam). 28 Id. at 193:21‒194:1. 29 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).
8 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
30 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. 31 JX 19. 32 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). 33 Tr. 13:12‒20 (Ramadurgam).
9 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 co-
founders’ 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
34 Id. at 694:6‒10 (Prasad). 35 Id. at 20:10‒22:13 (Ramadurgam). 36 JX 21; JX 24; Tr. 494:20‒23, 497:13‒16 (Prasad). 37 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). 38 PTO ¶ 30; JX 28 at 1; JX 48 at 10‒12. 39 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). 40 Prospectus at 17. 41 JX 394 at 2.
10 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
42 Tr. 14:13‒17 (Ramadurgam); id. at 472:16‒473:23, 479:18‒23 (Prasad); see also JX 312. 43 PTO ¶ 15; JX 109. 44 JX 46. 45 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.
11 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.
47 JX 50 at 7. 48 Id. at 13. 49 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). 50 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”).
12 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
52 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. 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). 55 JX 53; JX 54; Tr. 94:6‒95:23 (Ramadurgam). 56 JX 54 Tab “FY21 Destiny Valuation Model” Cell C6; Tr. 95:24‒96:9, 97:4‒5, 97:13‒ 15, 100:13‒14 (Ramadurgam).
13 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 external-
facing 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
57 JX 394 at 2. 58 See JX 110. 59 Tr. 43:18‒45:6 (Ramadurgam). 60 Id. at 45:7‒47:16; see id. at 533:11‒24 (Prasad). 61 Id. at 335:6‒23 (Kumar); see id. at 727:10‒24 (Prasad).
14 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
62 JX 154; Tr. 47:22‒48:21 (Ramadurgam); id. at 517:17‒518:19 (Prasad). 63 Tr. 518:20‒519:2 (Prasad). 64 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). 66 Id. at 51:19‒52:3; JX 184 at 2. 67 Tr. 520:11‒24 (Prasad).
15 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
68 Id. at 52:9‒11, 53:7‒14 (Ramadurgam). 69 JX 176 at 3; Tr. 54:12‒22 (Ramadurgam). 70 Tr. 597:15‒20 (Prasad). 71 JX 183 at 2; Tr. 55:3‒56:4 (Ramadurgam). 72 JX 183 at 2; Tr. 56:15‒57:22 (Ramadurgam). 73 JX 183 at 2; Tr. 52:11‒17, 57:12‒16 (Ramadurgam). 74 Tr. 523:22‒524:4 (Prasad). 75 See JX 184 at 2. 76 Id.; Tr. 58:10‒60:4 (Ramadurgam).
16 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
77 JX 187; Tr. 63:2‒9 (Ramadurgam); see also id. at 61:7‒63:9 (Prasad). 78 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. 81 See JX 225 Tab “Ownership.” 82 Id.
17 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
83 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.
18 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
86 Id. 87 Id. 88 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). 89 Frecka Dep. 128:23‒129:16. 90 JX 239; JX 248; JX 249. 91 JX 239; Tr. 602:2‒10 (Prasad).
19 and recruits. It described limited growth, no meaningful NAV premium, no near-
term 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
92 See JX 239; see also Post-Trial Arg. at 7:8‒22. 93 JX 247 at 1; Tr. 656:21‒657:7 (Prasad); see also JX 251 at 4. 94 JX 248 at 1‒2. 95 JX 253 at 1. 96 Id. 97 JX 254 at 1.
20 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
98 Tr. 553:11‒13, 641:9‒642:13 (Prasad). 99 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).
21 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).
22 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”).
23 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).
24 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).
25 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.
26 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.”).
27 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.
28 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.
29 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 long-
term 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).
30 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.
31 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).
32 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).
33 “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.
34 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).
35 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.
36 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.” GB-
SP 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.
37 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,
38 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).
39 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.”).
40 [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.
41 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.
42 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 co-
founder, Ramadurgam. Prasad timed the Transaction to occur when Tech100 was
43 “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.
44 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.
45 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).
46 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).
47 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.
48 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.
49 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,
50 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”).
51 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.
52 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.
53 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).
54 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.
55 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.
56 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 peer-
company 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.
57 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.
58 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.
59 700,000 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).
60 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-for-
250 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.
61 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.
62 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.”).
63 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.”).
64 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.
65 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.
66 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).
67 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.
68 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.
69 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.
70 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
71 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).
72 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
73 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).
74 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
75 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.
76 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 pre-
Transaction 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.
77 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.
78 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.
79 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
80 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”).
81 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
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,
82 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
83 prelitigation conduct is so egregious that it warrants fees as a form of damages.”).
Of course, “not every case of intentional fiduciary wrongdoing justifies fee-
shifting.” 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
84 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 co-
founder’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).
85 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 court-
appointed 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.”).
86 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
87 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
88 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 ill-
advised, they do not bear the necessary relationship to the fiduciary breaches and
299 Defs.’ Opening Br. 63.
89 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.
90 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. (Samvit Ramadurgam v. Destiny XYZ Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.