A Davis Polk team led by partners Andrew Ditchfield and Brian Burnovski received a shout out in AmLaw Litigation Daily’s “Litigator of the Week” column for securing dismissal of a lawsuit relating to Galaxy Digital’s termination of its proposed $1.2 billion acquisition of BitGo Holdings. BitGo asserted claims against Galaxy for wrongful repudiation, breach of contract, and breach of the implied covenant of good faith and fair dealing, and sought damages of at least $100 million. Vice Chancellor J. Travis Laster of the Delaware Court of Chancery granted Davis Polk’s motion to dismiss in a bench ruling after oral argument.

In granting Galaxy’s motion to dismiss, Vice Chancellor Laster adopted Davis Polk’s argument that Galaxy was entitled to terminate the parties’ merger agreement because BitGo failed to deliver contractually compliant financial statements by applicable deadlines in April and July 2022, which triggered Galaxy’s contractual right to terminate the agreement in the first half of August 2022. The court agreed that BitGo’s financial statements failed to satisfy specific requirements set forth in the merger agreement, finding that (1) financial statements that BitGo delivered in April 2022 failed to apply SEC staff interpretive guidance concerning the accounting treatment for digital assets held in custody on behalf of customers, which companies like BitGo are required to follow; and (2) revised financial statements that BitGo subsequently delivered in July 2022 contained a restriction on use from BitGo’s auditors that precluded Galaxy from filing the financial statements with the SEC as part of a registration statement required by the merger agreement. Vice Chancellor Laster also ruled that Galaxy’s valid termination right precluded BitGo’s claims of breach of express and implied terms of the merger agreement.

The Davis Polk litigation team also included counsel Pascale Bibi and associates Kyra Macy Kaufman, Phoebe Roque and Lily Zhou. Partners Joe Hall, Evan Rosen and Dan Gibbons provided corporate advice.

“Litigator of the Week Runners-Up and Shout Outs,” AmLaw Litigation Daily, (June 16, 2023) (subscription required)

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