First post. Probably violating numerous forum rules, but hopefully everyone can forgive me.
I've been very busy this past year but just recently caught
Chris Avellone's description of his exit from Obsidian.
I'm a corporate lawyer (private equity / M&A) at a top US law firm's NY offices, where I generally rep PE funds buying or selling private companies. On several occasions, I've seen this situation arise where a co-founder or holder of substantial equity in a company loses their equity as a result of a mandatory repurchase clause. Often, the board exercises its discretion to stick with a historical FMV, resulting in the exiting equityholder receiving pennies on the dollar for the repurchase of their equity interests. Depending on the situation, this could represent a breach of fiduciary duty to the equityholder, a breach of contractual duty under the bylaws or operating agreement, or even tax fraud (especially if any options are intended to qualify for treatment as an incentive stock options under 26 US Code 422).
However, in every situation I've seen, it's been a nonissue because the exiting equityholder has signed a general release of claims in exchange for a menial severance package. If that's the case here as well, Chris may be out of luck. If it's not, then perhaps he would have a claim against Obsidian or Dark Rock. The materials provided to Microsoft to help them value Obsidian during the acquisition could potentially be used as evidence that the board did not act in good faith when determining the value of Chris's equity at the time of his departure. Moreover, depending on the details of the acquisition (e.g., whether funds have been set aside in escrow for indemnification of third party claims), MS might be incentivized to settle with Chris rather than litigate.
Sorry if this is duplicative of anything posted elsewhere on the forums. I didn't see a post on point (admittedly I didn't check all the thousands of pages of potentially relevant posts), but the description of Feargus's actions (intimidation and nepotism) were irritating me, so I felt I had to post.
Disclaimer: None of the above is intended legal advice. I am not barred in the state of CA. Not sure my firm would want to take on a MS subsidiary (or we may even have conflicts of interest), but happy to put Chris in touch with a litigator in one of our CA offices if helpful.