Delaware judge rules public benefit corporations exempt from maximizing value in sale

Warby Parker

30/07/2026 24:08

By Tom Hals
WILMINGTON, DEL., July 29 (Reuters) - A Delaware judge ruled on Wednesday that public benefit corporations are not legally obligated to get the highest reasonable price for their stock in a sale, unlike traditional corporations.
Public benefit corporations, or PBCs, are a small but growing corporate structure that requires the board to balance profit with the interest of the PBC's stakeholders and a social mission. The structure has been adopted by Anthropic, the AI developer behind Claude, as well as a small number of public companies including eyewear brand Warby Parker WRBY.N.
Wednesday's ruling by Nathan Cook, a judge on Delaware's Court of Chancery, addressed for the first time obligations of PBC directors in a change-of-control situation.
The ruling came in a lawsuit by shareholders against MPower Financing, a privately owned PBC that helps international students obtain funding for studies in North America, and its directors and lenders.
The company needed urgent funding in early 2025 to avoid breaching a debt covenant, according to Cook's opinion. Two of its lenders agreed to provide $28 million in new financing and convert debt owed to them by MPower into deeply discounted stock, giving them a controlling stake.
Shareholders alleged the PBC directors who approved the deal violated their fiduciary duties to get the highest reasonable value for the stock in a change-of-control transaction, known in Delaware law as Revlon duties.
Cook disagreed and said focusing solely on maximizing value would be inconsistent with the PBC requirements to balance that obligation with other interests.
Cook also said the enormous implications of a change-of-control transaction meant the directors might be subject to a stricter standard of review in court, but he also said the board's handling of the transaction would have cleared that legal hurdle. 
Attorneys for the shareholders and MPower did not immediately respond to a request for comment.
The case is Drakes Landing Associates LP v. Tilden Park Capital Management LP, Delaware Court of Chancery, No. 2025-0898.
For Drakes Landing: David Jenkins and Jason Miller of Smith, Katzenstein & Jenkins
For MPower: Sarah Martin and Bryan Reed of Greenberg Traurig
For Tilden Park: John DiTomo and Jialu Zou of Morris, Nichols, Arsht & Tunnell; and Richard Horvath and Michael McGinley of Dechert  

 (Reporting by Tom Hals in Wilmington, Delaware)