Delaware Court Weighs $70 Million Trade Secret Appeal
Founders of acquired companies must watch for new guidance on post-sale data retention and non-compete liability.
Updated on Oct. 28, 2026 in Public Companies
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The Delaware Supreme Court heard arguments in an appeal involving a $70 million judgment against the founders of Enviro Tech Chemical Services. The case stems from allegations that the Harveys misappropriated trade secrets and violated restrictive covenants following the company’s $450 million sale to Arxada Holdings NA.
Why it matters
This appeal centers on the enforceability of post-sale restrictive covenants and trade secret protections for company founders. The outcome will clarify the legal risks owners face regarding data retention and non-compete obligations after exiting a business.
The Delaware Chancery Court previously ordered the Harveys to pay nearly $70 million in damages following the $450 million sale of their business. The Supreme Court recently held 50 minutes of oral arguments to review the lower court's decision.
The players
Mike Harvey
The founder of Enviro Tech Chemical Services Inc. who is currently challenging a lower court judgment.
Enviro Tech Chemical Services Inc.
A chemical services firm that was sold for $450 million to a strategic buyer.
Arxada Holdings NA
A large holding company that acquired Enviro Tech Chemical Services Inc.
The details
The litigation alleges that after selling Enviro Tech Chemical Services to Arxada Holdings NA, Mike Harvey and his nephews downloaded significant amounts of company information. The core legal dispute examines whether these actions breached restrictive covenants and constituted the misappropriation of trade secrets, resulting in the earlier multimillion-dollar penalty.
Timeline
Wednesday, October 28, 2026: The Delaware Supreme Court heard approximately 50 minutes of oral arguments.
Market Landscape
This case follows the established pattern of the Delaware Chancery Court’s strict enforcement of non-compete and trade secret agreements. It marks a significant test of the judicial rigor applied when evaluating post-acquisition conduct by former business owners.
Business owners should review their exit contracts to ensure all restrictive covenants and data-handling expectations are explicitly defined. Compliance with post-sale information protocols is a critical financial liability that can lead to significant court-ordered damages.
The takeaway
Founders must maintain strict data hygiene and adhere to non-compete language long after a company sale to avoid protracted litigation. Monitor future Delaware Supreme Court filings for a final decision on the standard for misappropriation claims.
Further reading
For more on how legal precedents impact owner exits, review our Public Companies section.
Source note: This article includes information reported by Bloomberglaw.
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