de-SPACs

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Sarah Abrams

In the wake of the SPAC IPO frenzy in 2021, SPAC activity cratered. However, as detailed in the following guest post from Sarah Abrams, there are signs that SPAC IPOs may be making a comeback, a revival that may raise certain concerns. Sarah is Head of Claims, Baleen Specialty, a division of Bowhead Specialty. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.Continue Reading Guest Post: SPACs are Back

After the 2021 peak of the SPAC IPO frenzy, many SPACs wound up liquidating, while another significant tranche of the SPACs (or the SPACs post-merger successor companies) wound up in litigation. The post-frenzy glut of SPAC-related lawsuits has since been making its way through the courts ever since, and some have made it to the settlement stage. In recent days, the parties to two of these SPAC-related lawsuits have reached noteworthy settlements. As discussed below, the two settlements – the Alta Mesa SPAC-related lawsuit settled for $126.3 million and the Grab Holdings SPAC-related lawsuit settled for $80 million – are among the largest ever SPAC-related lawsuit settlements and could potentially set standards for future SPAC lawsuit settlements. The two settlements are subject to court approval.Continue Reading Record-Setting Settlements in Two SPAC-Related Securities Suits

In the wake of the SPAC frenzy, which peaked in 2021, investors have filed a significant number of SPAC-related lawsuits, including not only securities class action lawsuits, but also including Delaware direct action breach of fiduciary duty suits. The Delaware actions have so far in at least some cases proven to be successful. More recently, however, the Delaware courts have projected impatience and even fatigue with these kinds of suits, and in at least one recent case, granted the defendants’ motion to dismiss. However, in a more recent case, the Delaware Chancery Court, although noting that the plaintiff’s allegations are “not strong” and “close to the line between an adequate and an inadequate claim,” denied the defendants’ dismissal motion. There are several interesting features to court’s opinion, as discussed below. The Delaware Chancery Court’s October 18, 2024, opinion can be found here.Continue Reading Del. Court Denies Dismissal Motion in SPAC-Related Action

Long-time readers know that the significant amount of SPAC activity in past years led to a surge in SPAC-related litigation. Some of this litigation has taken the form of traditional securities class action lawsuits. However, among the more noteworthy developments in the rise of SPAC-related litigation has been the emergence of a separate type of suit, the Delaware direct action breach of fiduciary class action lawsuit, sometimes referred to a MultiPlan claim in reference to the first suit of the type to be filed. As detailed below, these kinds of lawsuits have gone through a relatively swift evolution. Many of the these kinds of cases remain pending, have not yet reached the settlement stage. However, the GeneDX lawsuit, which is one of these kinds of cases, recently settled for $21 million, subject to court approval. There are a number of interesting aspects of this settlement, as discussed below. The parties settlement stipulation in the case can be found here.Continue Reading Delaware SPAC-Related Direct Action Breach of Fiduciary Duty Suit Settles for $21 Million

For the last several years, securities class action lawsuits related to SPACs and de-SPACs have been a significant factor in the overall annual number of securities suit filings. SPAC-related suits remain a significant factor in the number of filings again this year, even though it has now been several years since the peak of the SPAC frenzy. In the latest example, on October 17, 2024, a plaintiff shareholder filed a securities suit against cannabis company WM Technology alleging that both prior to and following its predecessor company’s merger with a SPAC, the company misrepresented a key customer engagement metric. The new lawsuit has some interesting features, as discussed below. A copy of the complaint can be found here.Continue Reading Cannabis Company Hit With SPAC-Related Securities Suits

In my recent review of the 1H24 securities class action litigation filings (here), I noted that SPAC-related securities suits were less of a factor in the overall number of suit filings during the year’s first six months than they had been in recent years. However, even though the peak of the SPAC frenzy was several years ago now, SPAC-related securities suits are continuing to be filed. The latest example is the SPAC-related securities suit filed late last week against SeaStar Medical Holding Corporation, which is the product of a 2022 SPAC merger. The new lawsuit has several interesting features, as discussed below. A copy of the July 5, 2024, complaint in the lawsuit can be found here.Continue Reading Medical Device Company Hit with SPAC-Related Securities Lawsuit

SPACs were back in the business headlines again last Friday, as the news circulated that shareholders of Digital World Acquisition Corp., a special purpose acquisition company, had approved the proposed business combination with Trump Media & Technology Group, the corporate parent of Truth Social, Donald Trump’s social media company. On the same day, in a reminder of what has happened to all too many companies that merged with SPACs during the peak of the SPAC frenzy in 2020 and 2021, shareholders of a SPAC that merged with an electric vehicle company sued the directors and officers of the SPAC as well as the EV company, alleging that in the merger proxy statement the defendants failed to disclose multiple business problems at the target company. The lawsuit is the latest SPAC-related securities suit to be filed after the collapse of the SPAC surge.Continue Reading EV Company Hit With SPAC-Related Securities Suit

As readers know, in recent years I have been tracking two securities class action litigation filing trends:  the filing of SPAC-related lawsuits, and the filing of COVID-related lawsuits. In a noteworthy development, a securities suit filed last week embodies both of these filing trends. That is, a company that was formed through a SPAC merger has been hit with a securities suit based on COVID-related allegations. As discussed below, the new lawsuit has several interesting features. A copy of the February 28, 2024, complaint can be found here.Continue Reading Two-Fer: SPAC-Merged Company Hit With COVID-Related Securities Suit        

Yelena Dunaevsky
Teresa Milano

As readers of this blog well know, SPAC transactions have been a frequent target of corporate and securities lawsuits. In the following guest post, Yelena Dunaevsky, Esq., Senior Vice President at Woodruff Sawyer, Executive Editor, SPAC Notebook and Teresa Milano, Esq., Vice President at Woodruff Sawyer, take a detailed look at the SPAC litigation and enforcement activity so far, including some interesting observations about recent trends. A version of this article was previously published on the SPAC Notebook (here). I would like to thank Yelena and Teresa for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.Continue Reading Guest Post: SPACs Poised to Turn a Corner in 2024: Annual Risk Update

One of the most important securities class action litigation trends in recent years has been the wave of securities lawsuits involving SPACs. And while as time has passed since the peak of the SPAC IPO frenzy in late 2020 and early 2021, SPAC-related securities class action suits continue to be filed. The latest example is the securities suit filed earlier this week against the electric vehicle company Fisker, which merged with a SPAC in 2020. A copy of the November 27, 2023, complaint can be found here.Continue Reading EV Company Hit with SPAC-Related Securities Suit