The Court of Chancery dismissed at the pleading stage a claim by former members of a now-bankrupt health care company (the “Company”) that the Company was fraudulently induced to join in a de-SPAC combination with a group of financially distressed health care companies. The Court dismissed the plaintiffs’ claims on several grounds, including finding no grounds to toll the statute of limitations for fraud, and faulting the Company for insufficient due diligence. Specifically, the Court rejected the plaintiffs’ arguments for equitable tolling based on alleged “fraudulent concealment” or the notion that the alleged fraud was “inherently unknowable.” The Court reasoned that the Company could have “request[ed] additional information on [the companies’] financial wellbeing” instead of relying on alleged oral statements and management presentations, particularly where certain disclaimers in the presentations “would have put the plaintiffs on notice of potential inaccuracies … and that they should conduct their own analysis.”
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