10.18.2022. Daily highlights

FanDuel wins in $1bn legal battle

The case discussed the breach of fiduciary duty claims relating to Paddy Power Betfair’s acquisition of FanDuel. As a result, FanDuel claimed victory after the New York appeals court dismissed a $1bn lawsuit. It was brought by its founders and former directors over breach of fiduciary duty claims.

Originally the deal stated for FanDuel, now Flutter Entertainment, to pay $158m upfront. Afterward adding $458m of the total $612m purchase price settling via share dealing. The original deal was to split the existing shares between common shares. FanDuel founders, former employees, and early investors in the business had these shares, and so-called ‘preferred shares’ issued to later-stage investors. Preferred shareholders could sell their shares in a deal valued at an agreed total of $555m, with any amount paid by Paddy Power Betfair over this amount split among common shareholders.

Court case details

The company was only valued at $559m, leaving the firm’s common shareholders without much for their respective stake. As a result, the founders of the business, including former CEO and co-founder Nigel Eccles and a group of over 100 former shareholders, filed a lawsuit in Scotland in August 2018 over the deal.

Allegations made by the group include that private equity investors KKR & Co. and Shamrock Capital Advisors LLC had conspired with members of the FanDuel board to deprive other shareholders of profits arising from the Paddy Power deal. This lawsuit was ultimately dismissed, with a secondary challenge being made in the New York courts by US-based shareholders in 2020, which sought to apply US law to the treatment of the case.

In respect of the US-based case, the group was successful. However, FanDuel and representatives of KKR and Shamrock launched an appeal over the ruling, suggesting it should be thrown out on the grounds the company is incorporated in Scotland and therefore comes under Scottish law.

In Scottish law, directors owe a fiduciary duty to their companies rather than investors. However, in hearings before the New York Supreme Court, justices applied the so-called ‘internal affairs’ doctrine to the case. This legal precedent, which subjects a company to laws based on where it is incorporated, applies only to current and not former board members.

Considering the case, the panel asserted that Scottish law, not New York law, governed the claim, further asserting that company directors owed fiduciary duties to their corporation and not to shareholders, effectively voiding the claim. Appeals panel members also dismissed the internal affairs doctrine claims concerning which law should be applied to only those defendant directors of the business who were at FanDuel when the lawsuit was launched in 2018.

Read more on FanDuel adding $10 to support Proposition 27 in California here!

Source: EGR.global  

New BetRivers brand ambassador – Bob McCown

Follow us on Google News

Liga Tarasova

Liga Tarasova has a history of quality assurance and leading teams in an outsourcing company. Currently, she is working remotely as an Editor in Chief for Onlinegamblers.com. She stands for fair and safe gambling for people in the USA. Not long ago, she lived in Malta, the global iGaming hub, and worked at an iGaming company offering cloud-based product and platform services to B2B partners. Liga’s passion is visual arts and interior design.

• 
•