Delaware court certifies appeal in Cloudflare stock dispute

Vice Chancellor J. Travis Laster of the Delaware Court of Chancery has certified an interlocutory appeal to the Delaware Supreme Court regarding his recent injunction against a proposed recapitalization plan for Cloudflare, Inc.

The court had issued a preliminary injunction on Oct. 16, 2026, blocking a plan that would have allowed co-founders Matthew Prince and Michelle Zatlyn to sell shares while maintaining their voting control. While the court ruled in favor of the defendants on statutory interpretation regarding Delaware’s 2025 corporate law reforms, it found a reasonable probability that the special committee overseeing the deal failed to act in good faith.

This failure to demonstrate good faith prevented the defendants from utilizing safe harbor provisions under Section 144 of Delaware corporate law at this stage of the litigation. The case serves as an early test of the state's 2025 corporate law amendments, known as SB 21, which govern insider transactions.

Cloudflare went public in 2019 with a dual-class share structure. As of June 2026, the founders held approximately 50.3% of the company's voting power. The proposed recapitalization was intended to allow the founders to generate approximately $2.1 billion in additional sale proceeds without losing control, a threshold they were projected to fall below by December 2026.

The court approved the certification of the interlocutory appeal on Nov. 3, 2026. Despite the legal progression, observers have cautioned that the move should not be interpreted as a sign that the underlying issues within the system are being resolved.