SCHEDULE: Court Sides with ATG Fund in Empery Digital Dispute

A court ruling on August 28, 2026, found Empery Digital Inc.'s board breached bylaws and fiduciary duties in rejecting ATG Fund's nomination notice, validating ATG's nominees.

Summary

• An amendment to a Schedule 13D filing details a court decision on August 28, 2026, regarding litigation initiated by ATG Fund against Empery Digital Inc.
• The court ruled that Empery Digital's Board of Directors breached the company's Bylaws and fiduciary duties by rejecting ATG Fund's nomination notice.
• The court found ATG Fund's nomination notice to be valid and its nominees eligible for election at Empery's annual meeting.
• The court also determined that disclosure of ATG Fund's short position in Bitcoin ETFs was not required by the Bylaws or the Schedule 13D filing.
• ATG Fund has since closed out its Bitcoin short positions.
• The court found that Tice Brown was not a participant in ATG Fund's solicitation and ATG Fund was not required to disclose information about him.
• As of August 28, 2026, ATG Capital Opportunities Fund LP, ATG Capital Management LP, ATG Capital Management GP LLC, and Gabriel Gliksberg beneficially own 4,500,000 shares, representing approximately 16.3% of Empery Digital Inc.'s outstanding common stock.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive development, as the court ruled in favor of ATG Fund regarding their nomination notice and fiduciary duty claims, validating their nominees and finding the board's rejection inequitable.

Positives

• The court ruled that Empery Digital's Board of Directors breached the company's Bylaws and fiduciary duties in rejecting ATG Fund's nomination notice.
• ATG Fund's nomination notice was deemed valid by the court, allowing their nominees to stand for election.
• The court found that ATG Fund was not required to disclose its Bitcoin ETF short position, nor information about Tice Brown, in its nomination notice or Schedule 13D filing.
• ATG Fund has closed its Bitcoin short positions, aligning with the company's operational shift.
• Reporting persons collectively hold 16.3% of Empery Digital Inc.'s outstanding shares.

Negatives

• The court's decision highlights a significant governance dispute between ATG Fund and Empery Digital's Board.
• The Issuer asserted new allegations regarding Tice Brown in its post-trial brief, which ATG Fund vigorously disputes, and the court did not reach a decision on these claims.

Risks

• Ongoing disputes regarding corporate governance and board nominations could lead to continued legal battles or shareholder activism.
• The Issuer's assertion of new allegations regarding Tice Brown, which remain undecided, could pose future legal challenges for ATG Fund.

Future Outlook

The filing does not contain specific forward-looking statements or guidance, but the court's decision implies that ATG Fund's nominees may stand for election at Empery's annual meeting, suggesting potential changes in board composition.

Management Comments

• The Court held that the Board 'lacked contractual grounds to reject the Nomination Notice' and breached the Bylaws when it rejected ATG Fund's Nomination Notice.
• The Court also found that 'the Board's reject[ion] [of] the Nomination Notice was inequitable and constituted a breach of the directors' fiduciary duties.'
• The Decision expressly stated that 'ATG [Fund]'s Nomination Notice is valid. ATG [Fund]'s nominees may stand for election at Empery's annual meeting.'
• The Court found that disclosure of the Bitcoin Short is not required under the Bylaws and that 'ATG [Fund] could not fairly be expected to guess that the Board would interpret the Bylaws to require the disclosure of a Bitcoin short position.'
• The Court held that the Defendants actions 'reflect[] a misunderstanding of not only basic contract interpretation, but also the purpose advance notice bylaws serve under Delaware law.'
• The Court found that 'Mr. Brown is not a participant in ATG [Fund's] solicitation' and that ATG Fund was not required to include information concerning Mr. Brown in the Nomination Notice.

Industry Context

StockSavvy.ai notes that disputes over nomination notices and board composition are common in corporate governance, particularly when activist investors seek to influence company strategy or management. This ruling reinforces the importance of clear bylaw interpretation and adherence to fiduciary duties.

Corporate Governance

Legal Proceedings

• Litigation initiated by ATG Fund against Empery Digital Inc. concerning the rejection of ATG Fund's Nomination Notice.
• The Court issued a memorandum opinion on August 28, 2026, ruling in favor of ATG Fund on claims of breach of bylaws and fiduciary duty.
• The Issuer asserted new allegations regarding Tice Brown as a 'group' member or having agreements with ATG Fund, which the court did not decide.

Stakeholder Impact

• Shareholders: Potential for changes in board composition and corporate strategy depending on the outcome of the annual meeting elections.
• Board of Directors: The ruling indicates a failure in governance processes and potential scrutiny of individual director actions.

Next Steps

• ATG Fund's nominees may stand for election at Empery Digital Inc.'s annual meeting.
• Further legal proceedings may occur regarding the Issuer's other claims concerning Tice Brown.

Key Dates

Recommendation

The court ruling is a significant positive for ATG Fund, validating their shareholder rights and challenging the incumbent board's actions. However, the undecided claims regarding Tice Brown and the potential for continued governance disputes warrant a cautious 'hold' until the full implications and future strategic direction of Empery Digital become clearer.

Keywords

Schedule 13D, Empery Digital Inc., ATG Capital Management, Nomination Notice, Bylaws, Fiduciary Duty, Litigation, Shareholder Rights