In the latest SPAC-related securities suits filing, electric aviation company Lilium N.V. has been sued by an investor after a short-seller published a report questioning the company’s technological and regulatory readiness, its development prospects, and its financial resources. Lilium became a publicly traded company in September 2021, when it merged with Qell Acquisition Corp., a special purpose acquisition company (SPAC). This lawsuit is the latest in a series of securities class action lawsuits filed since the beginning of 2021 against post-SPAC-merger companies, as discussed below. A copy of the April 18, 2022 lawsuit against Lilium can be found here.



Qell completed an IPO on September 30, 2020. On March 30, 2021, Qell announced its plan to complete a business combination with Lilium GmbH. Lilium, which is organized under the laws of the Netherlands and based in Germany, is in the business of developing an electric vertical take-off-and-landing (eVTOL) aircraft. The companies completed the business combination on September 14, 2021, with Lilium NV as the surviving publicly traded company.


On March 14, 2022, Lilium was the target of a highly critical report from short-seller Iceberg Research entitled “Lilium NV – The Losing Horse in the eVTOL Race.” The report questioned the company’s claims about its technology capabilities; about its regulatory readiness; about the state of its battery development; and about the adequacy of its cash resources to carry the company to commercialization. According to the subsequently filed securities class action lawsuit, the company’s share price declined 34% on following the report’s publication.


The Lawsuit

On April 18, 2022, a plaintiff shareholder filed a securities class action lawsuit in the Central District of California against Lilium; against Lilium’s CEO and CFO; and against the founder and CEO of Qell. The complaint purports to be filed on behalf of a class of investors who purchased the securities of Lilium, or of Qell, Lilium’s predecessor in interest, between March 30, 2021 (the date the proposed business combination was announced) and March 14, 2022 (the date of the short seller report).


The report quotes extensively from Qell’s public statements and filings during the period prior to the merger, reflecting statements about the capabilities of Lilium’s eVTOL technology, the readiness of the technology for commercialization, the extent of the company’s positing to obtain regulatory approvals, the qualities of the company’s battery technology, the level of Qell’s due diligence in connection with the planned business combination, and the sufficiency of the company’s cash resources to carry the company through to commercialization. The March 14, 2022 short seller report, which the complaint quotes extensively, questioned all of these representations.


The complaint alleges that during the class period, the defendants made false or misleading statements and/or failed to disclose that: “(1) Lilium materially overstates the Lilium Jet’s design and capabilities; (2) Lilium overstates the likelihood for the Lilium Jet’s timely certification; (3) Lilium misrepresents its ability to obtain or create the necessary batteries for the lilium Jet; (4) the SPAC-merger would not and did not generate enough cash to commercially launch the Lilium Jet; (5) Qell Acquisition Corp. did not engage in proper due diligence regarding the Merger; and (6) as a result, Defendants’ public statements and statements to journalists were materially false and/or misleading at all relevant times.”


The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff class.



By my count, this lawsuit is the 43rd SPAC-related lawsuit to be filed since January 1, 2021, and the 12th to be filed so far in 2022. The SPAC-related securities suits have been a significant factor in the volume of securities litigation filed so far in 2022; the 12 SPAC-related suits filed this year represent 20% of the approximately 60 total securities class action lawsuits that have been filed so far this year.


Like many of the SPAC-related lawsuits filed in recent months, this lawsuit was filed after the defendant company’s share price declined following publication of a critical short-seller report. By my count, 18 of the 43 SPAC-related securities suits filed since January 1, 2021 (41%) were filed against companies that were targeted by short seller reports. The complaint in this action is highly dependent on the short seller’s report; indeed, ten of the 38 pages in the newly filed complaint consist of nothing more than extensive block quotations from the short seller report.


Another feature this complaint shares with many of the other recent complaints filed against post-SPAC-merger companies is that the complaint names as a defendant one of the former officers of the predecessor SPAC. By my count, 28 of the 43 SPAC-related complaints filed since January 1, 2021 (65%) have included former directors or officers of the predecessor SPAC as named defendants. The presence of these individuals as defendants has a practical significance, because it means that the complaint brings into play not only the insurance of the go-forward operating company (which is likely to include coverage for the pre-merger wrongful acts of the prior private company and its directors and officers) but also the run-off coverage for the SPAC and its directors and officers.


Another feature this complaint shares with many of the prior SPAC-related securities suits is that it involves an electric vehicle company. To be sure, this company is an electric aircraft company, while most of the prior defendant companies were involved in the electric automobile or electric truck industries. However, this company’s technology clearly involves electric battery propulsion, rather the internal combustion engine propulsion, and similarly to the other electric vehicle companies, is attempting to develop vehicles dependent on developing electric battery technology.


By my count, and inclusive of this latest complaint, 16 of the 43 SPAC-related securities suits filed since January 1, 2021 (37%) have involved defendant companies in the electric vehicle industries.


One final note about this lawsuit is that it involves yet another SPAC from the SPAC IPO class of 2020. The SPAC IPO in this case took place in September 2020, when the SPAC frenzy in late 2020 and early 2021 was already well underway. While this complaint unquestionably involves a SPAC from the time when SPAC fever was running rampant, we still have seen relatively few lawsuits (only two by my count) from 2021, when there were over 600 SPAC IPOs. The way I look at it, though there has been a significant amount of SPAC-related securities litigation so far, there will be much more to come once the SPACs from the class of 2021 complete their planned mergers, a  process that will continue to unfold in the coming months.