Vice Chancellor Laster has granted a preliminary injunction against Cloudflare's recapitalization, and the ruling has reignited calls for corporations to consider leaving Delaware for other states. Wachtell, Lipton, Rosen & Katz, in a memorandum by founding partner Martin Lipton with Kevin S. Schwartz and Theo. Mirvis dated November 14, 2026, has a blunt answer to those calls: they are misguided.

The memorandum, published on November 14, 2026, as part of the Harvard Law School Forum on Corporate Governance's Delaware Law Series, examines the Cloudflare opinion and its treatment of Delaware's new statutory protections for controlling stockholder conflict transactions. Those protections were enacted in 2025 under SB 21 and codified as DGCL § 144 (an amendment to the Delaware General Corporation Law, the state's core corporate statute).

What did the Cloudflare ruling actually decide?

According to the memorandum, the opinion addressed several important legal issues under the new statute. Its holdings largely comported with the protective purpose of the 2025 amendment, in the firm's assessment, on two fronts.

• First, the court rejected the stockholder plaintiffs' effort to circumvent the statutory safe harbor regime (the mechanism that shields qualifying controller transactions from challenge) by invoking the statute's "injunctive relief" exception, which applies to transactions designed to deter, delay, or preclude a change of control.
• Second, the court accorded strong deference, in the controller conflict context, to a board's determination that directors serving on a special committee were disinterested.

Both rulings favored the corporate defense bar's reading of SB 21. A special committee, in Delaware practice, is a subset of independent directors formed to negotiate and evaluate a conflicted transaction on behalf of the full board.

Is the ruling a reason to leave Delaware?

Some quarters have answered yes. The preliminary injunction against Cloudflare's recapitalization, issued by Vice Chancellor Laster of the Delaware Court of Chancery, struck observers as a signal that the state's courts remain willing to block controller transactions even after the legislature acted in 2025 to make Delaware more hospitable to them.

Wachtell Lipton disagrees. The firm argues that the holdings in Cloudflare "largely comported with the protective purpose of the statutory amendment." In other words, the court enforced the balance the legislature struck rather than upsetting it.

How does the ruling fit the broader Chancery record?

The memorandum situates Cloudflare within a line of recent decisions. The authors note that the rulings built on earlier Chancery decisions by Vice Chancellor Will, which "evinced a careful regard for the protections afforded by the new statute." Wachtell Lipton had analyzed those earlier decisions in a memorandum of October 19, 2026.

That sequence matters for boards weighing domicile. Two separate vice chancellors, Laster and Will, have now interpreted DGCL § 144 in a manner the firm views as consistent with the statute's protective design. A recapitalization is a restructuring of a company's equity structure, typically altering the balance of voting power among share classes.

Why the reincorporation debate keeps returning

The episode shows the pressure points in Delaware's post-SB 21 settlement. The 2025 amendment was itself the legislature's response to a wave of defection threats from public companies, and the Cloudflare injunction tests whether the courts will honor the new safe harbors in practice.

The memorandum's authors bring long-standing authority to the question. Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz and a dominant figure in American takeover law. His co-authors, Kevin S. Schwartz and Theo. Mirvis, are partners at the same firm, which routinely represents boards in conflict-of-interest and controller matters.

Their conclusion is measured rather than celebratory. The court in Cloudflare honored the statute's design while preserving an injunctive avenue for transactions that fit the change-of-control exception. For boards and their advisers, the lesson the firm draws is that the renewed calls to abandon Delaware overreac: the Chancery record since SB 21, in Wachtell's reading, shows judicial enforcement of the statutory bargain, not judicial resistance to it.