Amid signs of a renewed uptick in SPAC activity, courts continue to grapple with D&O insurance coverage issues arising out of older de-SPAC transactions. In a March 30, 2026, decision involving the de-SPAC of View Operating Corporation (View), the Delaware Superior Court held, in part, that View’s D&O policy “public offering” exclusion did not apply to preclude coverage for claims arising out of a de‑SPAC transaction and that additional payment conditions could not be imposed unless expressly stated in the policy.
My thanks to Geoffrey Fehling of the Hunton Andrews Kurth law firm, who wrote about the court’s decision in his early April 2026 post on LinkedIn.
Background
The underlying facts follow a now-familiar de-SPAC trajectory. A private operating entity View, Inc. (“Old View”) entered into a merger with a special purpose acquisition company CF Finance Acquisition Corp. II (“CFII”), a blank-check company sponsored by Cantor Fitzgerald & Co. (SPAC), becoming a wholly owned subsidiary of the publicly traded parent. Following the transaction, the combined enterprise, View, faced a series of adverse developments, including an audit committee investigation, an SEC investigation, a securities class action, derivative litigation, and an SEC enforcement action against an officer tied to alleged misstatements during the transaction.
View then sought coverage under its D&O program for defense and settlement costs arising from these proceedings. While most insurers participated, one carrier denied coverage, relying primarily on a “public offering” exclusion and separately arguing that it had no payment obligation until defense costs were actually paid.
The insurance coverage dispute that followed centered on the interpretation of the “public offering” exclusion, which barred claims “arising out of any public offering of equity securities of the Company,” and the reimbursement insuring agreement. The insurer contended that the de-SPAC transaction functioned as a public offering of View’s securities, even if structured through the SPAC parent.
The Court’s Ruling
The Delaware Superior Court rejected the insurer’s coverage position and granted summary judgment in favor of View on the core issues, emphasizing that policy language must be applied as written and exclusions construed narrowly under Delaware law. The court held that the “public offering” exclusion applies only where there is an offering of the insured entity’s own equity securities. Because the transaction involved shares issued by the SPAC parent, not View, the exclusion did not apply.
The court also rejected the insurer’s attempt to rely on a “substance over form” theory, finding that this approach improperly collapsed the legal distinction between parent and subsidiary entities and expanded the exclusion beyond its plain terms. To the extent any ambiguity existed, under Delaware Law, it was required to be resolved in favor of coverage. The court further declined to consider extrinsic materials such as SEC guidance, reinforcing that unambiguous policy language controls.
Finally, the court rejected the insurer’s argument that payment obligations were triggered only after defense costs were actually paid, holding that “pay on behalf of” language requires payment once liability is incurred. Notably, the court also allowed View’s bad faith claim to proceed, finding the insurer’s positions insufficiently “colorable,” particularly given the lack of supporting authority and the shifting nature of its arguments.
Discussion
This Delaware Superior Court decision may reinforce the strict, narrow approach that Delaware courts often take toward interpreting insurance exclusions. Even in complex de-SPAC transactions, insurers bear a heavy burden to prove that an exclusion applies explicitly. For D&O underwriters, the takeaway appears straightforward: if an exclusion is expected to apply to a particular risk, it must say so clearly. Delaware courts hearing insurance coverage disputes involving de‑SPACs may not accept insurer arguments that rely on expanding or recharacterizing exclusionary provisions.
The ruling also highlights the continuing tension between form and substance in the SPAC context. While de-SPAC transactions may be described as functional equivalents of IPOs, the Delaware Superior Court declined to adopt that framing for purposes of policy interpretation. Instead, it adhered to corporate formalities and legal distinctions, which proved dispositive in the coverage analysis. For D&O underwriters, this underscores that how a transaction is legally structured, not how it is economically characterized, will drive coverage outcomes, reinforcing the need to underwrite based on legal form and deal mechanics.
Thus, this case may highlight a gap between traditional D&O policy language and modern transaction structures. Generic “public offering” exclusions in legacy forms may be inadequate and potentially vulnerable to challenge when applied to de-SPAC transactions. From a D&O underwriting standpoint, standard exclusions may need to be revisited with consideration of whether more tailored language addressing SPAC mergers, reverse recapitalizations, or similar structures is necessary to accurately capture intended risk allocation.
From a D&O exposure perspective, the Delaware court’s ruling may also have significant implications for the timing of defense cost advancement. By confirming that “pay on behalf of” language is triggered upon the incurrence of liability rather than actual payment, the court endorsed a policyholder-friendly interpretation that accelerates insurer payment obligations. Underwriters and claims professionals may recognize that this interpretation can materially impact anticipated loss arising from de-SPAC transactions.
The View coverage decision further reinforces that carriers may be required to advance defense costs promptly once liability attaches, rather than waiting for insureds to exhaust their own capital. Equally significant was the Delaware court’s willingness to allow View’s bad faith claim to proceed, notwithstanding the insurer’s assertion of a reasonable coverage position. For D&O insurers, this may signal that, under Delaware law, purportedly aggressive or unsupported coverage positions, particularly those lacking clear policy grounding or consistent rationale, could result in extra-contractual exposure.
Finally, even as SPAC formation activity ebbs and flows, the pipeline of litigation arising from prior de-SPAC transactions remains substantial. As these matters continue to generate coverage disputes, decisions like the one involving View and its insurer, may shape both underwriting practices and policy wording going forward.