Edwards Dismissed: Cloudbreak Fails to Beat Due Diligence Deadline

In a recent decision by the Delaware Court of Chancery on July 25, 2025; the case Edwards v. GigaAcquistions2, LLC, claims by former members of Cloudbreak Health, LLC were dismissed. The firm claimed it was fraudulently induced to join a de-SPAC transaction with debt-ridden healthcare companies, leading to bankruptcy. Despite Cloudbreak alleging fraudulent assurances from the Portfolio Companies and partners, the court held that their due diligence could have been more expansive, emphasizing that reliance on verbal assurances was insufficient. The court further highlighted that due diligence actors for the other party owe no duty to the acquirer. The case highlights a fundamental dilemma in acquisition processes where reliance on counterparties' information is precarious, stressing the importance of a robust due diligence process. The court's decision was grounded in arguments that Cloudbreak was not on inquiry notice by the time of its suit, with the limitation period for fraud already lapsed.