The Delaware Court of Chancery recently ruled on a significant contract dispute between Cogent Infrastructure, LLC and Sprint LLC. The court's decision, issued on August 11, 2026, addresses claims stemming from Cogent's acquisition of Sprint's long-haul fiber network. The case, identified as C.A. No. 2025-0486-PRW, highlights the complexities involved in business transactions and the importance of clear contractual terms.
This ruling affects both companies and could have broader implications for future corporate acquisitions and how disputes are resolved in similar contexts. The court's decision clarifies the boundaries of contract law and the extent to which claims can be pursued after a transaction has closed.
Background
The dispute began when Cogent Infrastructure entered into a Membership Interest Purchase Agreement (MIPA) with Sprint in September 2022. Cogent aimed to acquire Sprint's long-haul fiber optic network, which included both owned and leased fiber. The initial purchase price was set at $1, with the final amount to be determined through a post-closing price adjustment process.
One of the key issues in the transaction was the treatment of the System Use and Service Agreement (SUSA), a long-standing contract that required Sprint to make substantial annual payments. Cogent believed that the SUSA should have been classified as an operating lease, which would have entitled them to a price adjustment under the MIPA. However, Sprint contended that the SUSA was a service agreement, not subject to the same adjustments, leading to a significant financial dispute.
After the purchase, an independent accounting firm, BDO USA, reviewed the situation and sided with Sprint, determining that the SUSA payments should not be included in the price adjustment. This decision resulted in a nearly $24 million increase in the final purchase price that Cogent had to pay. Cogent subsequently filed a lawsuit seeking a reduction in the purchase price and indemnification for various liabilities.
The Ruling
The court ruled on Sprint's motion to dismiss Cogent's claims, granting it in part and denying it in part. Specifically, the court dismissed Cogent's fraud claim, stating that the allegations were duplicative of the breach-of-contract claims. The judge noted, "Cogent’s claims are not barred by the MIPA," emphasizing that the contractual language did not preclude Cogent from pursuing its claims.
Judge Wallace, who presided over the case, explained that the MIPA's provisions regarding price adjustments and indemnification were distinct. The court found that the independent accounting determination made by BDO did not resolve the broader legal claims Cogent sought to pursue. The ruling allows Cogent to continue its breach-of-contract claims regarding the SUSA and other financial liabilities.
Impact
This ruling has significant implications for both parties and the business community at large. It clarifies that independent accounting determinations do not necessarily preclude further legal action regarding contractual disputes. The court's decision reinforces the importance of precise contractual language and the need for parties to clearly define the scope of their agreements.
Moreover, the ruling sets a precedent for future cases involving complex business transactions where post-closing disputes arise. Companies engaging in similar acquisitions may need to consider the implications of this ruling when drafting their contracts and negotiating terms.
What's Next
Cogent can continue to pursue its breach-of-contract claims against Sprint. The court's decision allows for further litigation on these matters, and it remains to be seen how the case will unfold in subsequent proceedings. There is no indication in the court filing that this ruling will be appealed, but the parties may seek to resolve the remaining issues through negotiation or additional legal action.