Trump’s Media Company Hit with Breach of Contract Ruling as Lock-Up Expiration Nears

In recent days, much attention has been directed at the upcoming removal of Trump’s share lock-up restrictions, potentially allowing him to sell shares in Trump Media and Technology Group (NASDAQ: DJT) worth billions of dollars. However, a new legal development has now captured the interest of investors.

Trump Media’s Legal Dispute with Arc Global

For those unfamiliar, Trump Media and Technology Group recently became a public company through a reverse merger with SPAC Digital World (DWAC).

Before the merger, Arc Global filed a lawsuit against Digital World in the Delaware Court of Chancery, claiming that former CEO Eric Swider and three board members miscalculated Arc’s shareholding, resulting in the loss of over 2 million shares in the post-merger phase. Arc Global took issue with how its Class B DWAC shares were converted into Class A Trump Media shares.

In response, Digital World accused its former CEO Patrick Orlando and Arc Global Investments II of attempting to block the merger between DWAC and Trump Media for personal financial gain.

Today, Delaware Chancery Court Judge Lori Will found Trump Media and Technology Group liable for breach of contract in its dealings with Arc Global. However, the court dismissed Arc’s breach of fiduciary duty claims.

Additionally, Judge Will ruled that Arc Global’s stake will now be converted at a ratio of 1.4911, higher than the 1.3481 ratio proposed by Trump Media but less than the 1.8178 ratio Arc had originally sought.

Trump’s Lock-Up Restrictions Set to Expire

At the same time, there’s significant interest surrounding the imminent expiration of Trump’s lock-up restrictions on his 59% stake in Trump Media and Technology Group.

These lock-up restrictions, imposed after the reverse merger with SPAC Digital World, are officially set to end on September 26.

However, the restrictions could end as soon as this Thursday, allowing Trump to sell shares as early as Friday, provided certain conditions are met, including the stock trading above $12. As of now, the stock is trading at $16.67.

While Trump has publicly stated he does not intend to sell his shares, which are valued at around $2 billion, there is ongoing speculation about whether he might change his mind and sell part of his holdings.