Delaware Court Penalizes StarTop for Evidence Destruction, Lies in NICbyte Case
Delaware Chancery Court imposed major sanctions for egregious spoliation in NICbyte v. StarTop.
Why it matters: The ruling clarifies how Delaware courts will address extreme discovery abuse, setting a precedent for enforcement of litigation ethics and evidence preservation in high-stakes corporate disputes.
- On April 8, 2026, the court found StarTop deleted thousands of documents, including texts, emails, and data room files.
- Sanctions included an adverse inference that NICbyte’s agent lacked loan authority and StarTop knew it.
- NICbyte was granted an injunction against enforcement of the challenged security interests.
- The decision showcases the court’s willingness to penalize both spoliation and broader bad-faith conduct.
The Delaware Court of Chancery delivered a strong statement on litigation misconduct in NICbyte LLC v. StarTop Investments, LLC, C.A. No. 2023-0637-NAC. On April 8, 2026, Vice Chancellor Cook found StarTop and its principals engaged in deliberate spoliation—destroying thousands of critical documents, ranging from text messages to emails and data room files.
In a detailed post-trial memorandum, the court confirmed that this conduct went beyond typical discovery missteps. StarTop’s actions—coupled with dishonesty during proceedings—led to rare and severe remedies.
- The court imposed an adverse inference, heavily tilting outcomes against StarTop: it found that NICbyte’s agent did not have authority to enter the loans and StarTop was aware, a finding pivotal to the relief granted.
- NICbyte secured an injunction preventing StarTop from enforcing its claimed security interests in the contested loans—a direct result of the evidence destruction and misconduct.
- The opinion also addressed procedural challenges, including StarTop’s objections to NICbyte’s Rule 88 affidavit in support of spoliation sanctions.
Vice Chancellor Cook likened trial to "an archaeological dig," emphasizing how tampering with evidence distorts the fact-finding process and increases burdens on courts and adversaries alike.
This ruling is expected to influence litigation strategy across Delaware and similar jurisdictions, making clear the heightened risks of discovery violations in complex commercial disputes. Access the full opinion here and related commentary on Leagle.
By the numbers:
- April 8, 2026 — Date of Delaware Chancery Court opinion
- Thousands — Number of documents deleted by StarTop
- C.A. No. 2023-0637-NAC — Case docket number