A Delaware court has given payments startup Bolt the green light to settle with investor Activant over a dispute involving a $30 million loan to founder Ryan Breslow.
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In August, Ryan Breslow surprised investors with his plan to return to the helm of payments startup Bolt. But that shock quickly turned to anger when investors like Blackrock and Hedosophia realized that Breslow intended to effectively wipe out shareholders who didn’t buy the $450 million. Blackrock and Hedosophia sued to block the round a month later.
Six months later, the deal is still on ice. But one Bolt shareholder has managed to escape the turmoil. The Delaware Court of Chancery ruled in a Dec. 16 hearing that Bolt investor Activant Capital could sell $37 million of its stake back in the startup.
The decision ends a legal battle that began in July 2023, when Activant sued Breslow, accusing him of loading the startup with $30 million in debt to pay off a personal loan after he defaulted on it. Breslow had used his stock as collateral to take out the loan, but instead of letting it be written off to pay off the debt, he repaid the loan using money from the company’s bank accounts and then fired Activant founder Steve Sarracino and other Bolt board members. opposed the plan. At the time, Breslow said it was his “unfettered right” to remove Bolt’s directors and called Activant’s suit “nothing more than sour grapes.”
Bolt and Activant had reached an agreement to settle the suit again in May 2024, but that was blocked by an objection from a trio of Bolt’s biggest backers – BlackRock, Hedosophia and Untitled Investments. Now the courts have allowed the settlement to continue. That means Bolt will pay Activant $37 million for its stock, and the same value of Breslow’s Bolt stock will be canceled.
“For the avoidance of doubt, to borrow a phrase from Activant, no one is getting a ‘gold star’ here,” Vice Chancellor Nathan Cook of the Delaware Court of Chancery said in the decision. “Far from it, especially given the long sequence of events that led us here.”
The activist declined to comment. Bolt declined to comment.
The decision is a victory for the Connecticut-based venture fund, which had sought to rein in Breslow and cash in on its investment in Bolt after it led its Series C round in 2019. By January 2022, Breslow had decided a $355 million investment from Wall Street heavyweights like BlackRock, valuing Bolt at over $11 billion, and its stock made it one of the world’s youngest billionaires. Weeks later he resigned as CEO after a Twitter tirade directed at Stripe, Y Combinator and Sequoia. Then came lawsuits from clients like Authentic Brands Group, allegations of inflated metrics, and an SEC investigation (which the agency later dismissed). He returned in August with a plan to raise $450 million to turn Bolt into a WeChat-style super app.
Investors objected to the terms of the deal, which valued Bolt at more than $14 billion but brought Breslow back as chief executive with a pay and severance package; confused the startup with Breslow’s other project, health marketplace Love; and gave investors just a few days to commit or see 70% of the stock effectively disappear. To top it all off, Forbes reported that the lead investor named in the round had never heard of Bolt, while at least $250 million of the round came in the form of “marketing loans” from an unknown fund.
“They submitted highly unusual press reports that, to say the least, appeared to contradict and undermine very material assertions in the company’s communications with investors,” Vice Chancellor Cook noted in the ruling.
Breslow, Bolt and its remaining shareholders remain stuck in legal limbo, with BlackRock’s lawsuit stalled. Bolt’s board has formed a special committee to find a solution to the conflict with its shareholders. But the committee consists of just one person: Bolt director and video game developer Michael Carter, who is a close friend of Breslow’s. Investors have claimed Carter is conflicted and have called for new independent directors to be appointed to Bolt’s board and the special committee reviewing the deal, to no avail.
Do you have a tip for us? Contact reporters Sarah Emerson at semerson@forbes.com or 510-473-8820 at Signal, and Iain Martin at iain.martin@forbes.com.
Carter joined the Bolt board in 2023, after Breslow ousted a number of directors from Activant, Tribe Capital and WestCap in March 2023. They were replaced by three of Breslow’s friends: music producer Larrance Dopson, journalist Esther Wojcicki (mother of Susan Wojcicki and ” Godmother of Silicon Valley”) and The Mighty Ducks child actor and crypto investor Brock Pierce. Carter and Dobson remain on the Bolt board with property developer Joel Schreiber, who faces contempt of court charges in his ongoing legal dispute with Starwood Property Trust over a $130 million debt. Schreiber did not respond to a request for comment.
In August, Breslow had billed the $450 million fundraising as essential to Bolt’s relaunch, after he warned the business was losing market share. That sense of urgency seems to have disappeared as Bolt tries to answer questions about the strange deal.
For investors who poured over $1 billion of capital into the one-time booming fintech startup, there was some good news about its financial health from the court hearing. Despite Bolt reportedly losing $310 million on just $27 million in revenue in 2023, Vice Chancellor Cooked noted: “The company is now in a much better cash position and on a better financial footing.” based on numbers disclosed in discovery hearings but not made public.
