On December 31, 2025, the Delaware Court of Chancery held in Commave v. Zevra that Zevra Therapeutics, Inc.’s (Zevra) grant of a lien on a license agreement (the License Agreement) as part of a substantially all-assets collateral package for a loan constituted an “assignment” and “transfer” of the payments under the License Agreement. While security interests are generally not considered “transfers” until an event of default occurs and the secured party forecloses on its security interest, the Commave Court focused on, among other things, (i) the License Agreement’s “broad” definition of “Payment Assignment” (which included Zevra’s decision to “sell, assign, contribute, convey, grant or otherwise transfer . . . any or all of [its] rights to receive payment[s]” under the License Agreement to a third party), and (ii) the fact that the drafters of the License Agreement included a carve-out permitting a specific prior security interest, which the Court viewed as evidence that the drafters intended security interests to otherwise be considered “Payment Assignments” that would trigger Commave’s procedural rights of first refusal and negotiation. These factors facilitated the Court’s finding that the grant of a lien on the License Agreement was an assignment or transfer, activating mandatory notice and negotiation procedures under the License Agreement.

Although Commave comes out of the Delaware Court of Chancery and has yet to be tested by subsequent litigation or on appeal, parties should consider its guidance until the decision is limited or overturned, as courts across the country frequently look to Delaware courts for guidance. In negotiating agreements containing transfer or assignment restrictions, parties should consider specifying that a security interest in the agreement does not constitute a “transfer” or “assignment” under the agreement unless and until there is an event of default followed by enforcement of the security interest. The party whose transfer or assignment rights are constrained may also wish to specify that any carveouts are included for the avoidance of doubt and do not extend beyond the listed exclusions. Additionally, when entering into secured loan agreements, borrowers should consider expressly excluding agreements that restrict assignment or transfers from the collateral package. Finally, companies should review their existing contracts to identify potentially problematic anti-assignment provisions and determine whether clarity is needed in such provisions to prevent future issues.