Edward S. Lampert v. Cannon Square, LLC, 340 A.3d 1151

Edward S. Lampert controlled Sears Hometown and Outlet Stores, Inc. and Sears Holdings Corp. through the ESL Funds. In 2019, Sears Hometown merged into an acquisition subsidiary of Holdings, becoming wholly owned by Holdings' successor entity (Parent), with each share converted to a $3.21 merger consideration.
Stockholders filed class actions alleging the merger was unfair and breached fiduciary duties. The actions were consolidated into a single class action (the Plenary Action).
Cannon Square, LLC demanded appraisal for its shares but became an unsecured creditor after the Company’s 2022 bankruptcy. Cannon Square later opted to join the shareholder class action.
The Court of Chancery found the merger was unfair, with fair value at $4.06 per share, awarding damages of $0.85 per share to class members, and allowed Cannon Square to intervene to claim a recovery since it had not received the merger consideration.
The class action settled for $10 million. The distribution method of the settlement between Cannon Square and other stockholders became a contested issue.
The Chancery Court held that Cannon Square was entitled to $4.06 per share. Defendants sought interlocutory appeal, but the Delaware Supreme Court denied review as untimely and unwarranted under Rule 42.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Timeliness of Interlocutory Appeal	Application was timely and should be heard.	Motion was filed late, no good cause for delay.	Appeal denied as untimely and without good cause.
Distribution of Settlement Proceeds	Cannon Square should recover $4.06 per share as it received no merger consideration.	Distribution should be pro rata across class, including Cannon Square, totaling $0.95/share each.	Cannon Square entitled to $4.06 per share.
Entitlement to Merger Consideration	Cannon Square should get full fair value as it missed merger consideration.	Should only receive pro rata settlement amount.	Court sided with Cannon Square, full fair value awarded.
Interlocutory Review Standard	Criteria for review are met; substantial issue present.	Criteria unmet; case near final judgment, no exceptional circumstances.	No exceptional circumstances; interlocutory review not justified.

In re Sears Hometown & Outlet Stores, Inc. S’holder Litig., 309 A.3d 474 (Del. Ch. 2024) (found merger was not entirely fair and set fair value per share).