# Delaware Chancery blocks Cloudflare's founder-control recapitalization plan

Attorney advertising. Brief by Lou Schwartz, Schwartz & Associates, PC, Atlanta, Georgia. Published 2026-10-16; updated 2026-10-16. Responsible attorney: Lou Schwartz. Canonical: https://www.snalawyers.com/insights/delaware-chancery-blocks-cloudflare-s-founder-control-recapitalization

The Delaware Court of Chancery on October 16, 2026 barred Cloudflare Inc. from proceeding with a recapitalization that would have preserved co-founders Matthew Prince and Michelle Zatlyn's voting control, finding stockholders had shown a reasonable chance of proving a special committee acted to appease the founders rather than advance the company's interests. The plan would have created a new class of non-voting and special preferred shares, letting the founders sell billions of dollars in stock while keeping majority voting power despite holding only a small economic stake. Shareholders sued in June 2026 arguing the restructuring gave the founders the benefits of both cashing out and retaining control.

**Why it matters.** The decision is an early test of how Delaware courts will police special-committee conduct and founder-control preservation schemes under the state's revised corporate law framework, relevant to investors in other dual-class companies.

## Sources

1. [Del. Blocks Cloudflare Founder Control Recapitalization (Law360)](https://www.law360.com/articles/2539170/del-blocks-cloudflare-founder-control-recapitalization)
2. [Cloudflare Reshuffle Halted in Test of Delaware Law Overhaul (Bloomberg Law)](https://news.bloomberglaw.com/esg/cloudflare-reorg-halted-in-major-test-of-delaware-legal-overhaul)

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