Envestnet Wins Dismissal of Stockholder Class Action Challenging $4.5 Billion Sale to Bain

Paul, Weiss secured the dismissal of a stockholder class action challenging Envestnet, Inc.’s $4.5 billion all-cash sale to Bain Capital Private Equity LP, resulting in a complete victory for the company’s former directors in the Delaware Court of Chancery.

Vice Chancellor Bonnie David granted Paul Weiss’s motion to dismiss the complaint in its entirety, including an aiding and abetting claim against the board’s financial advisor Morgan Stanley, holding that the merger was approved by a fully informed, uncoerced vote of disinterested stockholders. Under the legal doctrine established in Corwin v. KKR Financial Holdings LLC, such a vote “cleanses” a transaction that doesn’t involve a conflicted controlling stockholder against breach of fiduciary duty claims. The court further held that, even if Corwin did not apply, dismissal was warranted because, under Cornerstone Therapeutics, Envestnet’s exculpation provision insulated the directors from duty of care claims, and the plaintiffs failed to plead that the undisputedly independent directors acted in bad faith.

Paul, Weiss advised Envestnet on the underlying merger, which closed in November 2024, and represented all seven Envestnet directors in the litigation. The decision came less than a month after oral argument, which the court heard on July 1.

The Paul, Weiss litigation team was led by partners Andre Bouchard, Geoffrey Chepiga, who argued the motion, and Nina Kovalenko, and included counsel Sabrina Hendershot and Marques Tracy. The Paul, Weiss deal team was led by corporate partners Robert Kindler and Benjamin Goodchild.