CIBC Bank USA v. Ryan Barker and BERA Brand Management, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE CIBC BANK USA, ) ) Plaintiff, ) ) v. ) C.A. No. 2024-0978-LWW ) RYAN BARKER, JIM SHEWARD, ) JIM STENGEL, SCOTT MILLER, ) JIM MCTAGGART, JEFFREY ) PEACOCK, JUSTIN REGER, and ) PEAKEQUITY PARTNERS I, L.P., ) ) Defendants, ) ) and ) ) BERA BRAND MANAGEMENT, ) INC. ) Nominal Defendant. ) MEMORANDUM OPINION Date Submitted: February 26, 2026 Date Decided: May 29, 2026 Bruce E. Jameson, Samuel L. Closic, & Caitlin E. Whetham, PRICKETT, JONES & ELLIOTT, P.A., Wilmington, Delaware; Douglas R. Gooding, Bryana T. McGillycuddy, John B. Lucy Jr., & Derek Farquhar, CHOATE, HALL & STEWART LLP, Boston, Massachusetts; Counsel for Plaintiff CIBC Bank USA Travis J. Ferguson, Sarah E. Delia, & Faith C. Johnson, MCCARTER & ENGLISH, LLP, Wilmington, Delaware; Counsel for Defendants Ryan Barker, Jim Stengel, Scott Miller, Jim McTaggart, Jeffrey Peacock, and Nominal Defendant BERA Brand Management, Inc. John M. O’Toole, Rudolf Koch, & Susan Hannigan Cohen, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Counsel for Defendants Jim Sheward, Justin Reger, and PeakEquity Partners I, L.P. WILL, Vice Chancellor  This litigation stems from a failed corporate sale process. Nominal defendant BERA Brand Management, Inc. is an insolvent entity that tried, in vain, to sell itself as a going concern. After the company’s prospects collapsed, its assets were sold in an Article 9 sale for pennies on the dollar. Plaintiff CIBC Bank USA—a creditor of BERA—then brought this action. CIBC seeks to press derivative claims against BERA’s board of directors under two primary theories of fiduciary misconduct. First, it alleges that the directors breached their duties to BERA by bypassing viable acquisition offers in pursuit of a higher valuation that would clear a preferred stockholder’s liquidation preference. Second, it asserts that the board allowed BERA’s CEO to go rogue and sabotage a viable deal. CIBC also brings related aiding and abetting claims against two BERA stockholders and a direct claim for tortious interference with contract. The defendants moved to dismiss the complaint on three grounds. They argue that CIBC lacks standing to pursue the fiduciary duty claims directly, that—if the claims are derivative—demand is not excused, and that the complaint otherwise fails to state a claim. I conclude that CIBC’s fiduciary duty and aiding and abetting claims are derivative because they allege harm to the corporation itself. Although this classification affords CIBC standing to sue as a creditor, the claims must be dismissed under Court of Chancery Rule 23.1. CIBC advances the novel argument 1 that creditors deserve a relaxed pleading burden under that rule. Rule 23.1’s plain text, however, holds all derivative plaintiffs to the same heightened standard—one that CIBC has not satisfied. Because CIBC disavows the application of enhanced scrutiny and cites no material conflicts affecting a majority of BERA’s directors, it must plead demand futility through particularized facts supporting a reasonable inference that the board acted in bad faith. Stripped of conclusory group pleading, the complaint lacks allegations calling into question the directors’ good-faith exercise of business judgment amid BERA’s deteriorating financial condition. As for the tortious interference claim, it survives only against BERA’s former CEO. I. FACTUAL BACKGROUND The following facts are drawn from the Verified Amended and Supplemented Complaint (the “Complaint”) and documents it incorporates by reference.1 The well-pleaded facts are presumed true for purposes of resolving the defendants’ motions to dismiss.2 1 Verified Am. and Supplemented Compl. (Dkt. 34) (“Am. Compl.”); see Freedman v. Adams, 2012 WL 1345638, at *5 (Del. Ch. Mar. 30, 2012) (“When a plaintiff expressly refers to and heavily relies upon documents in her complaint, these documents are considered to be incorporated by reference into the complaint . . . .”). 2 See infra note 190. 2  A. BERA and Its Board Nominal defendant BERA Brand Management Inc. is a Delaware corporation headquartered in New York.3 Founded in 2013, BERA operates as a software-as-a- service provider.4 When this action was filed, BERA had a five-member Board of Directors consisting of BERA’s founder and Chief Executive Officer Ryan Barker, former BERA President Jeffrey Peacock, and non-management directors Jim McTaggart, Jim Stengel, and Scott Miller (together, the “Board”).5 Barker, Peacock, McTaggart, and Stengel were among BERA’s largest stockholders, holding 28%, 16%, 12%, and 2% of the company’s voting power, respectively.6 B. The Credit Agreement Plaintiff CIBC Bank USA is an arm of the Canadian Imperial Bank of Commerce, a multinational banking and financial services institution.7 On July 11, 2019, CIBC executed a Credit Agreement with BERA.8 3 Am. Compl. ¶ 31. 4 Id. ¶¶ 32-33, 67. 5 Id. ¶¶ 34, 36-39, 41. 6 Id. ¶¶ 34, 36, 38-39. 7 Id. ¶ 30. 8 Id. ¶ 46; Am. Compl. Ex. A (“Credit Agreement”). 3  Under the Credit Agreement, CIBC extended certain revolving loans to BERA.9 CIBC held a continuing security interest in substantially all of BERA’s assets to secure repayment of these loans.10 BERA was also required to meet minimum revenue and EBITDA thresholds.11 The Credit Agreement was amended multiple times, including to acknowledge certain “events of default” starting in 2019.12 Under the seventh and final amendment, executed on February 15, 2023, CIBC agreed to forbear from exercising its remedies for existing default until July 2023, absent a new default.13 C. Peak’s Investment and BERA’s Financial Decline Between 2020 and 2022, BERA held a series of funding rounds.14 By May 2023, defendant PeakEquity Partners I, L.P.—a private equity fund—had invested over $25 million and held a 26.6% stake in BERA.15 Peak’s shares carried a liquidation preference, entitling it to at least three times its original issue price if 9 Am. Compl. ¶ 46. 10 Credit Agreement §§ 1.1 (definition of “Collateral”), 8.1 (grant of collateral). 11 Id. § 11.14.1-.2. 12 Am. Compl. Exs. A.1-A.7; Am. Compl. ¶ 51. 13 Am. Compl. ¶ 56. 14 Id. ¶¶ 57-60. 15 Id. ¶¶ 42, 60. 4 BERA were sold or liquidated.16 Peak also appointed two of its partners—Jim Sheward and Justin Reger (together, the “Peak Directors”)—to the Board.17 Peak’s investment coincided with a period of severe financial decline. Starting in 2020, BERA experienced three consecutive years of negative EBITDA.18 As the company transitioned to its software-as-a-service business model, its workforce shrank and it lost nearly a third of its customer accounts.19 While BERA struggled, CIBC grew concerned about a potential default under the Credit Agreement.20 On May 15, 2023, CIBC contacted director Reger and another Peak employee to see if Peak would satisfy BERA’s debt to CIBC.21 CIBC recommended that BERA be sold.22 By early June 2023, BERA had breached the Credit Agreement’s minimum EBITDA covenant.23 CIBC sent a notice of event of default to BERA, along with a proposed forbearance agreement.24 It then exercised its rights under the Credit 16 Id. ¶ 61. 17 Id. ¶¶ 35, 40-44. 18 Id. ¶ 68. 19 Id. ¶¶ 67, 70. 20 Id. ¶ 71. 21 Id. ¶ 72. 22 Id. ¶ 73. 23 Id. ¶ 74. 24 Id. 5 Agreement to sweep approximately $2.5 million from BERA’s bank accounts to set off the unpaid debt.25 Afterward, the Board resolved to initiate a sale process for BERA.26 D. The Initial Sale Process On June 27, 2023, BERA and CIBC executed a Forbearance Agreement, which granted BERA a reasonable opportunity to sell substantially all of BERA’s assets and repay its debt.27 CIBC also re-lent BERA the $2.5 million it had swept via setoff.28 BERA hired an outside financial advisor to market and sell BERA by October 31, 2023.29 By August 18, BERA had received two indications of interest from third parties.30 As of mid-October, neither indication of interest had progressed beyond the preliminary stages.31 On October 18, CIBC learned from Reger and another Peak representative that BERA CEO Barker viewed the two indications of interest as “low ball[s]” that Am. Compl. Ex. B (Notice of Event of Default and Reservation of Rights); Am. Compl. 25 Ex. C (Notice of Acceleration and Setoff); Am. Compl. ¶¶ 74-75. 26 Am. Compl. ¶ 75. 27 Id. ¶¶ 76-77; Am. Compl. Ex. D (“Forbearance Agreement”). 28 Am. Compl. ¶ 77. 29 Id. ¶¶ 10, 78. 30 Id. ¶ 80. 31 Id. 6 did not reflect BERA’s true value.32 When CIBC approached Barker, he confirmed that he would not sell BERA for less than $75 million—a valuation high enough to clear Peak’s liquidation preference and secure returns for common stockholders, including himself.33 A week later, CIBC sent BERA a notice of default under the Forbearance Agreement based on BERA’s continuing breach of its minimum EBITDA covenant.34 CIBC reserved its right to terminate the Forbearance Agreement and again granted BERA additional time to pursue a sale.35 By December 1, no buyer had materialized.36 CIBC asked BERA and its financial advisor to expand their outreach and lower their valuation threshold; Barker agreed.37 BERA’s lead investment banker told CIBC she was confident BERA could be sold for $10 to $15 million.38 32 Id. ¶ 81. 33 Id. ¶ 82. 34 Id. ¶ 85; Am. Compl. Ex. E (notice of default on the Forbearance Agreement). 35 Am. Compl. ¶ 85. 36 Id. ¶ 86. 37 Id. ¶ 87. 38 Id. ¶ 88. 7  E. The Terminus Offer In December 2023, Terminus Capital Partners expressed interest in acquiring BERA as a going concern for between $10 and $15 million.39 It made a written offer to purchase BERA for $7 million on January 8, 2024, and expressed its willingness to partner with Barker post-closing.40 The Board reached an impasse over the Terminus offer because it could not agree on how to allocate proceeds.41 Because the offer would not clear Peak’s liquidation preference, certain directors believed the offer was insufficient and could be improved.42 Barker, meanwhile, refused to support the sale unless he retained additional equity or gained personal proceeds.43 BERA’s financial situation further deteriorated.44 In mid-March, BERA’s financial advisor told CIBC that it believed Terminus could increase its bid to $10 million.45 The Board remained deadlocked, and the process stalled.46 39 Id. ¶ 89. 40 Id. ¶ 91. 41 Id. ¶¶ 92-95. 42 Id. ¶ 100. 43 Id. ¶ 94. 44 Id. ¶¶ 102-03. 45 Id. ¶ 105. 46 Id. 8  F. The Article 9 Sale On April 19, 2024, CIBC gave notice that it was proceeding with a secured party sale of BERA’s assets pursuant to Article 9 of the Uniform Commercial Code (UCC).47 At this point, BERA was insolvent under the balance sheet test.48 The Article 9 auction was postponed to mid-June to allow more time for bidding.49 By the end of the process, CIBC’s financial advisor marketed BERA to 162 parties but received only two non-binding offers.50 The first offer, from ESW Holdings, Inc., proposed purchasing BERA’s assets for $2.75 million in cash.51 ESW indicated it was unlikely to retain BERA’s management team.52 The second offer, from Hale Capital Partners, LP, proposed paying $3.6 million in cash.53 Hale conditioned its offer on retaining BERA’s key executive, including Barker, and noted that it might increase its bid after diligence.54 47 Id. ¶ 109. 48 Id. ¶ 165. 49 Id. ¶¶ 113-14. 50 Id. ¶ 115. 51 Id. ¶ 117. 52 Id. 53 Id. ¶ 118. 54 Id. ¶¶ 119, 120. 9  CIBC selected Hale’s offer because of its materially higher valuation and retention terms.55 G. Barker’s Backchanneling On June 17, 2024—the eve of the Article 9 auction—Hale abruptly declined to bid.56 Hale explained that Barker had contacted it to propose an $8.5 million investment in BERA at a $25 million valuation.57 Barker also demanded a revised deal structure with increased equity for management.58 CIBC called Miller (an outside BERA director) to report this development. Miller knew Barker contacted Hale but mistakenly believed it concerned an employee option pool.59 CIBC warned Miller that Barker was jeopardizing the sale.60 On June 20, Hale submitted a revised offer for $500,000 in cash plus a five- year, $2 million unsecured payment-in-kind promissory note.61 When CIBC’s financial advisor asked why Hale had drastically reduced its offer, Hale explained 55 Id. ¶ 121. 56 Id. ¶ 123. 57 Id. ¶ 124. 58 Id. ¶ 125. 59 Id. ¶ 126. 60 Id. 61 Id. ¶ 128. 10 that Barker had threatened to block the sale by transferring BERA’s key assets and employees to a new entity unless Hale capitulated to his demands.62 With Hale’s bid slashed, CIBC contacted ESW to gauge its continued interest.63 ESW floated a price between $2 and $3 million.64 CIBC then confronted Barker, who admitted he was prepared to transfer BERA’s customer contracts to an entity he controlled called “BERA.ai.”65 In response, CIBC’s outside counsel sent a letter to the Board accusing it of stonewalling the Article 9 sale.66 The Peak Directors resigned from the Board days later.67 On June 23, Barker and BERA’s Chief Financial Officer told CIBC that the company would soon cease to operate unless CIBC provided an additional loan.68 Barker refused to fulfill ESW’s diligence requests unless CIBC supplied the funds.69 CIBC tried to broker a meeting between ESW and BERA, to no avail.70 62 Id. ¶ 129. 63 Id. ¶ 131. 64 Id. 65 Id. ¶ 132. 66 Id. ¶¶ 136-37; Am. Compl. Ex. F (June 20, 2024 letter). 67 Am. Compl. ¶ 137. 68 Id. ¶ 139. 69 Id. ¶ 140. 70 Id. ¶ 141. 11  H. The Auction On June 25, 2024, the Board notified CIBC that it voted to liquidate BERA because no going-concern buyer emerged.71 CIBC scheduled the Article 9 auction for June 28.72 At the auction, the Stagwell Group—through an affiliate, Harris Acquisitions, LLC—purchased BERA’s assets for approximately $650,000.73 As a result, BERA satisfied only $650,000 of the over $7 million it owed CIBC under the Credit Agreement.74 BERA also incurred an additional $470,000 in debt for CIBC’s legal fees related to the sale.75 On June 28, Harris filed a certificate of formation with the Delaware Secretary of State for “Harris Acquisitions LLC.”76 On August 16, Harris changed the company’s legal name to “BERA.ai LLC.”77 As of the time the Complaint was filed, BERA.ai’s website listed Barker as its founder and CEO.78 71 Id. ¶ 143. 72 Id. ¶ 144. 73 Id. ¶¶ 145-46. 74 Id. ¶ 147. 75 Id. ¶ 150; see also Credit Agreement § 14.5. 76 Am. Compl. ¶ 158. 77 Id. ¶ 159. 78 Id. In addition to the five current Board members, CIBC also named Peak Directors Reger and Sheward as defendants. 12  I. This Litigation On September 20, CIBC filed this action on behalf of nominal defendant BERA against BERA’s current and former directors and Peak.79 The operative Complaint advances five counts: breach of fiduciary duty against Barker (Count I) and Sheward, Stengel, Miller, McTaggart, Peacock, and Reger (Count II); aiding and abetting breaches of fiduciary duty against Peak (Count III) and against Barker in his capacity as a stockholder (Count IV); and tortious interference with contractual relations against Peak and Barker (Count V).80 The five current Board members and BERA moved to dismiss the Complaint on May 13.81 Peak and the Peak Directors filed a separate motion to dismiss and 79 Dkt. 1. 80 Am. Compl. ¶¶ 192-226. 81 Dkt. 36; see Defs. Barker, Stengel, Miller, McTaggart, Peacock, and Nominal Def. BERA Brand Management, Inc.’s Mot. to Dismiss the Verified Am. and Supplemented Compl. (Dkt. 42) (“Board Defs.’ Opening Br.”). 13 joinder.82 After briefing was complete,83 the court heard oral argument on February 26, and the motions were taken under advisement.84 II. LEGAL ANALYSIS The defendants have moved to dismiss CIBC’s derivative claims (Counts I through IV) under Court of Chancery Rule 23.1 for failure to plead demand excusal, and the entirety of the Complaint under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.85 I begin with the threshold question of whether Counts I through IV are direct or derivative, which requires first determining whether the claims sound in contract or tort. I conclude that these counts are appropriately styled as derivative, fiduciary duty claims. Because CIBC failed to adequately plead that a demand on the Board would have been futile, Counts I through IV are dismissed under Rule 23.1. As for the direct tortious interference claim in Count V, it fails against Peak and is dismissed Dkt. 37; Peak Defs.’ Joinder and Opening Br. in Supp. of Mot. to Dismiss the Verified 82 Am. and Supplemented Compl. (Dkt. 43) (“Peak Defs.’ Opening Br.”). 83 Pl.’s Omnibus Answering Br. in Opp’n to Defs.’ Mots. to Dismiss the Verified Am. and Supplemented Compl. (Dkt. 48) (“Pl.’s Opp’n Br.”); Defs. Barker, Stengel, Miller, McTaggart, Peacock, and Nominal Def. Bera Brand Management, Inc.’s Reply Br. in Further Supp. of Mot. to Dismiss Pl.’s Verified Amended and Supplemented Compl. (Dkt. 52) (“Board Defs.’ Reply Br.”); Peak Defs.’ Joinder and Reply Br. in Further Supp. of Mot. to Dismiss the Verified Am. and Supplemented Compl. (Dkt. 53) (“Peak Defs.’ Reply Br.”). 84 Dkt. 59. 85 Board Defs.’ Opening Br. 1, 3-4; Peak Defs.’ Opening Br. 4. 14 under Rule 12(b)(6), but survives against Barker. The Complaint is thus dismissed in its entirety, except for Count V as asserted against Barker. A. Direct or Derivative CIBC purports to bring breach of fiduciary duty and aiding and abetting claims derivatively as the creditor of an insolvent company.86 Under North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, a creditor of an insolvent corporation has standing to pursue derivative—not direct— breach of fiduciary duty claims.87 Accordingly, if Counts I through IV are direct, they must be dismissed for lack of standing.88 Before resolving whether these claims are direct or derivative, I pause to address the defendants’ argument that Counts I, II, and IV concern breaches of contract.89 Relying on Nemec v. Shrader, the defendants assert that CIBC is improperly bootstrapping BERA’s failure to repay its debt under the Credit and Forbearance Agreements into breaches of fiduciary duty.90 In Nemec, the Delaware 86 Board Defs.’ Opening Br. 1-2, 12; Peak Defs.’ Opening Br. 18. 87 930 A.2d 92, 103 (Del. 2007) (holding that “individual creditors of an insolvent corporation have no right to assert direct claims for breach of fiduciary duty against corporate directors” but “may nonetheless protect their interest by bringing derivative claims”). 88 See Vichi v. Koninklijke Philips Elecs. N.V., 2009 WL 4345724, at *20-21 (Del. Ch. Dec. 1, 2009) (dismissing an aiding and abetting claim brought by a creditor because the underlying breach of fiduciary duty claim was direct, not derivative). 89 Board Defs.’ Opening Br. 7-11. 90 Id. at 9; Board Defs.’ Reply Br. 4. 15 Supreme Court affirmed the dismissal of a fiduciary duty claim because a stock plan governed the disputed repurchase.91 The obligations at issue here are not “expressly addressed by contract.”92 CIBC’s claims do not concern untimely payments or missed EBITDA thresholds.93 Rather, the Complaint centers on the Board’s alleged failure to pursue a value- maximizing transaction and Barker’s purported prioritization of personal financial gain over BERA’s interests.94 These contentions concern fiduciary obligations owed by BERA’s directors and officers, independent of any contract.95 Thus, Counts I, II, and IV are fairly viewed as fiduciary duty-based claims. Turning to whether the claims are direct or derivative, I must “look beyond the labels used to describe the claim, evaluating instead the nature of the wrong alleged.”96 Under Tooley v. Donaldson, Lufkin & Jenrette, Inc., this determination rests “solely on the following questions: (1) who suffered the alleged harm (the 91 Nemec v. Shrader, 991 A.2d 1120, 1129 (Del. 2010). 92 Id.; see Pl.’s Opp’n Br. 20-21. 93 See, e.g., Credit Agreement §§ 6.1, 11.14.2. 94 Am. Compl. ¶¶ 192-206, 212-16. 95 The defendants assert that CIBC’s tortious interference claim is an implicit concession that this is a contract dispute. See Board Defs.’ Opening Br. 10-11. The existence of overlapping contractual rights does not necessarily extinguish independent fiduciary duties. See, e.g., Nemec, 991 A.2d at 1129. 96 Sciabacucchi v. Liberty Broadband Corp., 2018 WL 3599997, at *7 (Del. Ch. July 26, 2018). 16 corporation or suing stockholders, individually); and (2) who would receive the benefit of any recovery or other remedy (the corporation or the stockholders, individually)?”97 Both Tooley factors confirm that CIBC’s breach of fiduciary duty and aiding and abetting claims are derivative. The alleged harm is BERA’s loss in enterprise value—one suffered by the corporation itself. Any recovery would flow to BERA in the first instance. 1. Who Suffered the Alleged Harm? CIBC contends that BERA sustained a loss of $6.35 million—representing the difference between Terminus’s $7 million going-concern offer and the $650,000 liquidation sale to Stagwell, plus $470,000 in legal and professional fees.98 The director defendants insist that this loss fell directly on CIBC rather than derivatively on BERA. They advance three arguments in support: (1) the $6.35 million figure matches the amount owed to CIBC under the Credit Agreement after the Article 9 sale; (2) the $470,000 in legal and professional fees were triggered by an obligation in the Credit Agreement; and (3) the claims are direct under Revlon.99 None of the defendants’ arguments succeed. 97 845 A.2d 1031, 1033 (Del. 2004). 98 See Am. Compl. ¶¶ 147-48, 150. 99 Board Defs.’ Opening Br. 14; Board Defs.’ Reply Br. 3. 17  First, destroying the value of BERA by rejecting value-maximizing transactions is a “classically derivative” injury to the corporation from corporate mismanagement.100 Barker and BERA’s other directors allegedly “operate[d] to injure the firm in the first instance by reducing its value . . . .”101 They indirectly harmed CIBC “by diminishing the value of the firm and therefore the assets from which the creditors may satisfy their claims.”102 A creditor’s claims do not become direct simply because it suffered a harm secondary to the corporation’s.103 Since any injury to CIBC is “dependent on an injury” to BERA, the alleged harm is derivative in nature.104 Second, CIBC’s request for $470,000 in fees does not indicate a direct harm. The fees are sought as damages to BERA—not CIBC.105 BERA allegedly incurred 100 See Prod. Res. Gp., L.L.C. v. NCT Gp., Inc., 863 A.2d 772, 776 (Del. Ch. 2004) (“Some of PRG’s fiduciary duty claims rest largely on generalized and conclusory assertions that NCT’s board and officers have mismanaged the firm. Claims of this type are classically derivative . . . .”); N. Am. Cath. Educ. Programming Found., Inc. v. Gheewalla, 2006 WL 2588971, at *18 (Del. Ch. Sep. 1, 2006) (same), aff’d, 930 A.2d 92 (Del. 2007); see also Donald J. Wolfe, Jr. & Michael A. Pittenger, 2 Corporate and Commercial Practice in the Delaware Court of Chancery § 11.02 at 11-9 (2d ed. updated Jan. 2025) (“Claims brought by creditors of an insolvent corporation for breach of fiduciary duty on the part of the directors for harming the economic value of the firm have . . . been characterized as derivative.”). 101 Prod. Res., 863 A.2d at 776. 102 Id. 103 See Gheewalla, 930 A.2d at 101 (noting that when a corporation is insolvent, “creditors take the place of the shareholders” in enforcing the fiduciary obligations of directors). 104 Brookfield Asset Mgmt. v. Rosson, 261 A.3d 1251, 1263 (Del. 2021). 105 Am. Compl. ¶ 150. 18 this additional debt due to the Board’s mismanagement of the sale process. It is dependent on the primary injury to BERA.106 Third, the defendants incorrectly characterize Counts I through IV as direct claims under Revlon.107 Although the defendants stress that challenges to a sale of control are inherently direct, they draw the wrong distinction.108 CIBC is not claiming that BERA’s directors deprived stockholders of a fair share of merger consideration or a control premium. Rather, it alleges that fiduciaries derailed transactions that would have preserved BERA’s remaining enterprise value. When a corporation “suffer[s] harm in the form of inadequate consideration for the sale of itself as a going concern,” any harm to equity holders “is only a natural and foreseeable consequence of the harm to the corporation.”109 CIBC’s losses as a creditor are likewise a natural consequence of the primary harm experienced by BERA. 106 See Brookfield, 261 A.3d at 1263. 107 See Revlon, Inc. v. MacAndrews & Forbes Hldgs., Inc., 506 A.2d 173 (Del. 1986). 108 See Brookfield, 261 A.3d at 1276 (noting that Revlon “provide[s] a basis for a direct claim for stockholders to address fiduciary duty violations in a change of control context”); El Paso Pipeline GP Co. v. Brinckerhoff, 152 A.3d 1248, 1266 (Del. 2016) (Strine, C.J., concurring) (“Revlon already accords a direct claim to stockholders when a transaction shifts control of a company from a diversified investor base to a single controlling stockholder.”). 109 Agostino v. Hicks, 845 A.2d 1110, 1119 (Del. Ch. 2004). 19  2. Who Would Receive the Benefit of Any Recovery? CIBC purports to seek damages on behalf of BERA.110 The defendants maintain that CIBC, as BERA’s creditor, would receive the funds in satisfaction of BERA’s debt.111 As a result, they maintain that any recovery truly flows to CIBC. Under the second prong of Tooley, “[w]here all of a corporation’s stockholders are harmed and would recover pro rata in proportion with their ownership of the corporation’s stock solely because they are stockholders, then the claim is derivative in nature.”112 This inquiry concerns the nature of the legal recovery—not the downstream economic destination of the funds.113 Claims of corporate mismanagement that destroy enterprise value are classically derivative because the corporation is the initial beneficiary of any recovery.114 Corporate insolvency, and the reality that a creditor may ultimately capture the recovered funds, does not transform a derivative claim into a direct one. 110 Am. Compl., Prayer for Relief. 111 Board Defs.’ Opening Br. 14. 112 El Paso, 152 A.3d at 1261. 113 See Prod. Res., 863 A.2d at 792 (“[R]egardless of whether they are brought by creditors when a company is insolvent, these claims remain derivative, with either shareholders or creditors suing to recover for a harm done to the corporation as an economic entity and any recovery logically flows to the corporation and benefits the derivative plaintiffs indirectly to the extent of their claim on the firm’s assets.”). 114 Id. (“In other words, even in the case of an insolvent firm, poor decisions by directors that lead to a loss of corporate assets and are alleged to be breaches of equitable fiduciary duties remain harms to the corporate entity itself.”). 20  Because CIBC’s claims center on BERA’s lost enterprise value, it cannot “prevail without showing an injury to the corporation.”115 Counts I through IV of CIBC’s complaint are derivative, and CIBC has equitable standing to assert them on BERA’s behalf. B. Demand Futility To pursue its derivative claims in Counts I through IV, CIBC was required to make a demand on BERA’s Board or adequately plead that doing so would have been futile.116 It chose the latter path.117 “Rule 23.1 requires that a plaintiff who asserts demand futility must ‘comply with stringent requirements of factual particularity that differ substantially from the permissive notice pleadings governed solely by Chancery Rule 8(a).’”118 The court “is confined to the well-pleaded allegations in the Complaint, the documents incorporated into the Complaint by reference, and facts subject to judicial notice . . . .”119 The facts are evaluated “in their totality,” and all reasonable 115 Brookfield, 261 A.3d at 1266 (citation omitted). 116 See Ct. Ch. R. 23.1(a). 117 See Am. Compl. ¶ 180 (alleging that a demand would have been futile). 118 In re INFOUSA, Inc. S’holders Litig., 953 A.2d 963, 985 (Del. Ch. 2007) (citation omitted); see also Brehm v. Eisner, 746 A.2d 244, 254 (Del. 2000) (explaining that Rule 23.1 creates “stringent requirements of factual particularity”). 119 In re Kraft Heinz Co. Deriv. Litig., 2021 WL 6012632, at *4 (Del. Ch. Dec. 15, 2021) (citing White v. Panic, 783 A.2d 543, 546-47 (Del. 2001)), aff’d, 282 A.3d 1054 (Del. 2022) (TABLE). 21 inferences are drawn in the plaintiff’s favor.120 The court will reject “conclusory allegations” or “inferences that are not objectively reasonable[.]”121 Before addressing whether the Complaint meets this standard, I first consider whether creditors are subject to the heightened pleading requirement of Rule 23.1. The defendants aver that all derivative plaintiffs—stockholders and creditors alike— must plead demand futility with particularity.122 CIBC, for its part, posits that creditors should be held to a lower pleading standard.123 After resolving this issue, I evaluate whether CIBC has satisfied its burden. 1. Application of Rule 23.1 to Creditors CIBC makes the novel argument that, as a creditor, its demand futility allegations should be evaluated under a lesser pleading burden. It proposes various alternatives, including the Rule 12(b)(6) reasonable conceivability standard, an adaptation of Rule 23.1, or the plausibility standard applied by bankruptcy courts.124 120 Del. Cnty. Empls. Ret. Fund v. Sanchez, 124 A.3d 1017, 1019 (Del. 2015). 121 In re GoPro, Inc., 2020 WL 2036602, at *8 (Del. Ch. Apr. 28, 2020) (citation omitted). 122 See Board Defs.’ Reply Br. 5-7. 123 See Pl.’s Opp’n Br. 28-34. 124 See id. at 34-39. 22 Both the underpinnings of Delaware corporate law and the plain text of Rule 23.1 foreclose this argument. The parties agree that creditors are subject to the demand futility doctrine.125 Demand futility is anchored in the bedrock substantive principle under 8 Del. C. §141(a) that directors—not stockholders or creditors—manage the business and affairs of the corporation.126 Section 141(a) “does not distinguish between stockholders, creditors, or other corporate constituencies.”127 And Rule 23.1 is the “procedural embodiment of this substantive principle of corporation law.”128 It follows that, to preserve a board’s “prerogative to decide how to handle a corporate claim,”129 creditors asserting derivative claims must comply with the demand futility doctrine. Rule 23.1’s text confirms this application. It provides that “[t]he complaint in a derivative action must . . . state with particularity . . . any effort by the derivative plaintiff to obtain the desired action from the entity” and “the reasons for not 125 See id. at 31; Board Defs.’ Reply Br. 5. 126 See 8 Del. C. § 141(a); Spiegel v. Buntrock, 571 A.2d 767, 772-73 (Del. 1990) (“A basic principle of the General Corporation Law of the State of Delaware is that directors, rather than shareholders, manage the business and affairs of the corporation.”). 127 Quadrant Structured Prods. Co. v. Vertin, 102 A.3d 155, 182 (Del. Ch. 2014). 128 Rales v. Blasband, 634 A.2d 927, 932 (Del. 1993). 129 Quadrant, 102 A.3d at 181. 23 obtaining the action or not making the effort.”130 The rule does not distinguish between stockholders and creditors; it applies to “a derivative action” brought by a “derivative plaintiff.”131 There is no textual basis for exempting creditors from Rule 23.1’s stringent pleading requirements.132 Nevertheless, CIBC offers two reasons for holding creditors to a relaxed burden for pleading demand futility.133 Both arguments are unavailing. First, CIBC asserts that because creditors lack information rights under 8 Del. C. § 220, they are disadvantaged when attempting to satisfy Rule 23.1’s particularity standard.134 That argument ignores that commercial lenders can protect themselves by contract. CIBC did precisely that, bargaining for extensive information rights in the Credit Agreement.135 130 Ct. Ch. R. 23.1(a)(1) (emphasis added). 131 Id. 132 Given that the rule is unambiguous, I decline to consider the legislative history that CIBC cites in support of its reading. Delaware courts interpret rules of procedure using the same principles applied to statutory construction. See In re Petition of State, 708 A.2d 983, 988 n.17 (Del. 1998) (citing Greco v. State, 701 A.2d 419, 421 (Md. 1997)). Under these principles, if the court “determines that a statute is unambiguous, [it] give[s] the statutory language its plain meaning.” Sussex Cnty. Dep’t of Elections v. Sussex Cnty. Republican Comm., 58 A.3d 418, 422 (Del. 2013). 133 Pl.’s Opp’n Br. 31, 33. 134 Id. at 31-33; see 8 Del. C. § 220(b)(1) (noting that “any stockholder . . . shall . . . have the right during the usual hours for business to inspect for any proper purpose” certain books and records of the corporation (emphasis added)). 135 Credit Agreement § 10.1.1-2 (requiring BERA to provide, among other things, consolidated balance sheets and statements of earnings and cash flows on an annual and monthly basis); id. § 10.1.5 (requiring BERA to provide financial projections); id. § 10.1.6 24  Second, CIBC suggests that insolvency inherently compromises a director’s impartiality. It believes that such directors are less receptive to a demand “when the corporation’s financial condition has weakened its ability to provide indemnification and insurance.”136 Relatedly, CIBC asserts that directors of an insolvent corporation may have clouded judgment because they face the prospect of losing their roles.137 But Delaware law already accounts for these dynamics. If a director faces a substantial likelihood of personal liability on a non-exculpated claim and lacks indemnification, for example, that director will be deemed interested.138 There is no ground—textual or equitable—for lowering the pleading standard when creditors pursue derivative claims. Rule 23.1’s requirements apply to any “derivative action” brought by any “derivative plaintiff.”139 CIBC is not exempt. (requiring BERA to provide “upon reasonable request by Lender, such other financial statements, tax returns, and other information . . . relating to the affairs” of BERA); id. § 10.2 (authorizing CIBC to inspect BERA’s books and records). CIBC also acknowledges that it had real-time access to BERA’s management and financial advisor. See, e.g., Am. Compl. ¶ 126 (alleging CIBC called defendant Miller to discuss threats to the Hale deal); id. ¶ 88 (referencing discussion between CIBC and BERA’s financial advisor). 136 Pl.’s Opp’n Br. 33-34 (quoting Prod. Res., 863 A.2d at 796). 137 Id. See United Food & Com. Workers Union & Participating Food Indus. Empls. Tri-State 138 Pension Fund v. Zuckerberg, 262 A.3d 1034, 1059 (Del. 2021). 139 Ct. Ch. R. 23.1(a)(1). 25  2. The Zuckerberg Analysis When this suit was filed, the Board had five members: Barker, Stengel, Miller, McTaggart, and Peacock.140 To excuse demand, CIBC must successfully challenge the impartiality of at least three of these directors. Under United Food & Commercial Workers Union v. Zuckerberg, the court must consider: (i) whether the director received a material personal benefit from the alleged misconduct that is the subject of the litigation demand; (ii) whether the director faces a substantial likelihood of liability on any of the claims that are the subject of the litigation demand; and (iii) whether the director lacks independence from someone who received a material personal benefit from the alleged misconduct that is the subject of the litigation demand or who would face a substantial likelihood of liability on any of the claims that are the subject of the litigation demand.141 This inquiry is done on a “director-by-director” basis.142 “[I]f the answer to any of the questions is ‘yes’ for at least half of the members of the demand board,” then demand is excused as futile.143 140 Am. Compl. ¶ 41. The Peak Directors, Sheward, and Reger departed before this litigation was filed. Id. ¶¶ 35, 40. 141 Zuckerberg, 262 A.3d at 1059. 142 Id. 143