News & Analysis as of

Fiduciary Duty Special Purpose Acquisition Companies (SPACs)

Hogan Lovells

Solak v. Mountain Crest Capital: fiduciary duties claims abound for SPAC sponsors and directors

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In Solak v. Mountain Crest Capital, the Delaware Court of Chancery found that a stockholder plaintiff pleaded a viable breach of fiduciary duty claim based on an alleged failure of the board of directors of a SPAC to disclose...more

Woodruff Sawyer

Will SPACs Benefit From Recent DGCL Amendments?

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In the last edition of the SPAC Notebook, we examined the current risks to SPACs incorporating in the Cayman Islands. In this edition, we turn our focus to Delaware and its new set of amendments to the Delaware General...more

Morris James LLP

Chancery Finds Sufficiently Pled Fiduciary Duty Claims Relating to De-SPAC Transaction

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Solak v. Mountain Crest Capital LLC, et al., C.A. No. 2023-0469-SG (Del. Ch. Oct. 18, 2024) - The Court of Chancery found that the plaintiff stated legally-sufficient claims in connection with a merger transaction against...more

Woodruff Sawyer

SPAC Perspective: What Do We Do About Cayman?

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Cayman continues to be a hot topic among SPACs. It comes up in almost every conversation I have about SPACs and de-SPACs. My clients are asking: Should they incorporate in the Cayman Islands and then remain there after their...more

Hogan Lovells

Delaware Court of Chancery dismisses “De-SPAC” merger claims at motion to dismiss stage

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In In re Hennessy Capital Acquisition Corp. IV Stockholder Litigation, the Delaware Court of Chancery for the first time dismissed breach of fiduciary duty claims against directors involved in a merger with a special purpose...more

A&O Shearman

Delaware Court Of Chancery “Barely” Sustains Claims Challenging Representations About Value Of SPAC Shares

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On October 18, 2024, Vice Chancellor Glasscock of the Delaware Court of Chancery declined to dismiss a putative class action brought by stockholders of special purpose acquisition company (“SPAC”) Mountain Crest Acquisition...more

Cooley LLP

Delaware Court of Chancery Finally Dismisses a de-SPAC Complaint

Cooley LLP on

Since Vice Chancellor Lori Will’s seminal decision in In re MultiPlan Corp. Stockholders Litigation in January 2022, the Delaware Court of Chancery has seen a wave of lawsuits accusing special purpose acquisition companies...more

Lowenstein Sandler LLP

Current State of Play with SPAC Litigation and Available Insurance Coverage

Lowenstein Sandler LLP on

Today, Lynda A. Bennett and Heather Weaver of Lowenstein’s Insurance Recovery Group sit down with Yelena Dunaevsky, Senior Vice President, Transactional Insurance, at Woodruff Sawyer to talk about the current state of SPAC...more

Morris James LLP

Chancery Reviews SPAC Precedents and Dismisses Complaint for Failure to Show Impairment of Stockholders’ Redemption Rights

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In In re MultiPlan Stockholders Litigation, the Delaware Court of Chancery reasoned that common special purpose acquisition company (SPAC) governance and compensation structures create potential conflicts between on the one...more

Jones Day

Court of Chancery Grants Rare Motion to Dismiss Suit Governed by Entire Fairness Standard

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The electric vehicle company Canoo went public in a de-SPAC transaction in December 2020. After its stock price fell, a stockholder in the SPAC who chose not to redeem his stock sued the SPAC board and its controller for...more

Vinson & Elkins LLP

Takeaways From the Delaware Court of Chancery’s First Dismissal of MultiPlan-style SPAC Challenge

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Since the Delaware Court of Chancery’s January 2022 decision in In re MultiPlan Corp. Stockholders Litigation,1 plaintiffs in Delaware had enjoyed a long and unbroken string of motion to dismiss victories in suits alleging...more

King & Spalding

Delaware Chancery Court Issues Precedential Decision Dismissing Claims Challenging “De-SPAC” Merger Disclosures

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The Delaware Court of Chancery’s recent decision in In re Hennessy Capital Acquisition Corp. IV Stockholder Litigation,1 marks the Chancery Court’s first total dismissal of a complaint alleging breaches of fiduciary duties in...more

Jones Day

2023 Securities Litigation Year in Review

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During 2023, securities lawsuit filings rose for the first time in four years. Settlements declined last year; there were nine mega-settlements of more than $100 million, including a $1 billion settlement. Case filings...more

Woodruff Sawyer

SPACs Poised to Turn a Corner in 2024: Annual Risk Update

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Here we are again—another year of SPAC ennui. We’re hearing derisive comments about the death of SPACs, unending deadline extensions, almost 200 liquidations, 70 deal terminations, and general SPAC malaise. If you’ve followed...more

Fishman Haygood LLP

A Brief Look at Direct SPAC Cases

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Special purpose acquisition companies (“SPACs”) have been in the litigation spotlight recently. As SPAC disputes play out in courts nationwide, one especially interesting field of play is in the Delaware Chancery courts where...more

Morris James LLP

Chancery Court Again Applies Entire Fairness to Claims Challenging SPAC Transaction

Morris James LLP on

Laidlaw v. GigAcquisitions2, LLC, C.A. No. 2021-0821-LWW (Del. Ch. Mar. 1, 2023) - In the aftermath of a SPAC merger, the plaintiff (a public stockholder) brought claims for breaches of fiduciary duty against the SPAC's...more

Woodruff Sawyer

SPAC Litigation Mid-Year Update: Delaware Opens the Gates

Woodruff Sawyer on

With SPAC IPOs virtually gone but SPAC mergers (aka de-SPACs) continuing at a steady pace since the beginning of the year, the questions around getting a deal done boil down to the following: How and where can companies get...more

Woodruff Sawyer

Guide to D&O Insurance for SPAC IPOs, 2023 Edition

Woodruff Sawyer on

As they go through their initial public offering (IPO) and the subsequent merger & acquisition (M&A) process, special purpose acquisition companies (SPACs) face many regulatory, legal, and business hurdles. Obtaining the...more

Proskauer - The Capital Commitment

Ripples Following the SPAC Wave: Litigation and Regulatory Risks

It’s a pattern we often see in boom-and-bust cycles—disputes rising in the period after a wave crests. SPAC deal volume hit an unprecedented high in 2021, but then slowed down in 2022 alongside IPOs. However, the fallout from...more

Wilson Sonsini Goodrich & Rosati

2022 Technology and Life Sciences PIPE Report

In this inaugural issue of the 2022 Technology and Life Sciences PIPE Report, we present analysis related to 108 private investments in public equity (PIPEs) by U.S.-based technology and life sciences companies between...more

Morris James LLP

Chancery Finds SPAC’s Sponsor and Board Potentially Violated Fiduciary Duties by Depriving Public Stockholders of the Information...

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Delman v. GigAcquisitions3 LLC, C.A. No. 2021-0679-LWW (Del. Ch. January 4, 2023) - Delaware law establishes that fiduciaries of a corporation cannot be exempted from "their loyalty obligation and the attendant equitable...more

A&O Shearman

Pair Of Delaware Chancery Court Decisions Deny Motions To Dismiss SPAC Shareholder’s Fiduciary Breach Claims, Following MultiPlan

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On January 4, 2023, and again on March 1, 2023, Vice Chancellor Lori Will of the Delaware Court of Chancery denied motions to dismiss claims against directors and controlling shareholders of GigCapital-affiliated special...more

Katten Muchin Rosenman LLP

SPAC Groundhog Day

On March 1, 2023, the Delaware Court of Chancery issued its third decision concerning fiduciary duties in connection with de-SPAC transactions (and impliedly, SPAC formation). See Laidlaw v. GigAcquisitions2. The case...more

Goodwin

Private Fund Sponsors Remain in Spotlight of the SEC’s Examination Priorities

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On February 7, 2023, the Division of Examinations (“EXAMS”) of the Securities and Exchange Commission (“SEC”) issued its examination priorities for 2023 reflecting a continued focus on SEC-registered private fund sponsors....more

Skadden, Arps, Slate, Meagher & Flom LLP

In Novel SPAC Ruling, Court Questions Fundamental SPAC Structure Under Delaware Law

With all the SPAC activity and scrutiny over the past several years, it was only a matter of time before the Delaware courts had an opportunity to weigh in on SPAC stockholder litigation. Early last year, in January...more

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