A climactic moment arrived at Delaware’s Court of Chancery on Thursday. In an electrifying session, the court threw a curveball, halting the anticipated settlement between Snapchat‘s parent company, Snap Inc., and a group of shareholders. The court raised eyebrows, questioning the sudden inclusion of another class of shareholders and critiquing the insufficient notice given about the settlement.
It felt like a courtroom drama where the gavel was about to seal a deal, only for a sudden twist to throw everything into chaos. Vice Chancellor Paul A. Fioravanti Jr. needed more. As tensions built, he compared the situation to trying to complete a puzzle with missing pieces. “The briefing… does not explain why the settlement was expanded to Class B,” he remarked, echoing the perplexity many felt.
Chancery Snap Settlement : The Capital Conundrum
The heart of this legal whirlwind? Snap’s multifaceted capital structure. Picture a three-tiered cake: the base is the public-facing Class A stock, the middle, a secretive Class B stock held by a select few like the giants Tencent, and the topmost, a supervoting Class C stock, exclusively in the hands of Snap’s co-founders.
