Dechert Secures Key Dismissal in Delaware Court of Chancery

A team from Dechert helped secure an important dismissal on behalf of our client, Tilden Park Capital Management, in litigation in the Delaware Court of Chancery in a decision that also addressed significant open questions of Delaware law touching on the governance of public benefit corporations.

P​ublic benefit corporations are a relatively recent creation of Delaware law, with the Delaware General Assembly adopting their authorizing statute in 2013. The authorizing statute mandates that directors of a public benefit corporation are to balance the public purpose of the organization against stockholders' pecuniary interest . This standard differs from a traditional Delaware corporation whose directors must fulfill their duties for the ultimate benefit of the company's stockholders.

In the litigation captioned Drakes Landing Assocites, L.P. V. Tilden Park Capital Management, L.P., plaintiffs sought to challenge a debt-to-equity conversion of international student loan provider MPower Financing PBC. As a result of the conversion, Tilden Park and another hedge fund would jointly hold a majority of the outstanding shares of common stock of MPower. The MPower board of directors appointed an independent and disinterested special committee to evaluate and negotiate the transaction, with the committee ultimately approving the deal. In the suit filed last year, plaintiffs, who are minority stockholders of MPower, challenged the transaction as a change of control that failed to maximize value for the stockholders of MPower. On July 29, 2026, Delaware Vice Chancellor Nathan A. Cook issued an opinion rejecting plaintiffs' claims and dismissing the case with prejudice.

In so dismissing, Vice Chancellor Cook held that the seminal "Revlon rule," which requires the directors of a traditional Delaware corporation to act solely to maximize stockholder value in a change of control transaction, does not apply to the directors of a public benefit corporation. "To say that directors of a public benefit corporation 'must perform [their] fiduciary duties in the service of [the] specific objective' of 'maximizing the sale price of the enterprise,' or that they 'must focus on' that 'primary objective[,]' would be inconsistent with the public benefit corporation statute's requirement that directors consider and balance other interests against stockholder pecuniary interests," the opinion states.

The Court did not decide the related question of whether Revlon's requirement to review the approval of a change of control transaction under "enhanced scrutiny" for the reasonableness of the directors' process applies to public benefit corporations, finding that plaintiffs failed to state a claim even if enhanced scrutiny were to apply. Indeed, the Court held that plaintiffs failed to plead facts to rebut the statutory safe harbor protecting the special committee's balancing of MPower's public interests and the stockholders' financial interests.

Being the first significant Delaware decision addressing the governance of a public benefit corporation, the Court's holding in Drakes Landing should provide greater certainty both for public benefit directors that their disinterested decisions will be upheld and for parties contracting with the organization. That result is significant because, while a relatively recent creation, the public benefit corporation framework has been increasingly implemented, including by many prominent AI-focused companies.

The Dechert team representing Tilden Park Capital Management in the litigation included corporate partner Rick S. Horvath, litigation partner Michael H. McGinley and corporate associate Molly Wang. Corporate partners Nicholas Marchica, Rick Horvath and William Robertson represented Tilden Park in the underlying transaction.

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