In an article published last month, the Wall Street Journal chronicled the difficulties that many of the SPACs launched during the SPAC IPO frenzy in late 2020 and early 2021 are having trying to identify a suitable merger target. Many of the SPACs, the article suggested, might be forced to liquidate; still others, the article suggested, could “pursue low-quality companies” as the SPAC sponsors seek to “stave off possible losses.” I had occasion to recall the Journal article as I read the allegations in a newly filed SPAC-related shareholder derivative suit. The new lawsuit illustrates the one of the types of litigation risk some SPACs could face as they mull last minute mergers before the approaching end of their 24-month search period.
Continue Reading Derivative Suit Alleges SPAC Merged with Company Outside the Targeted Industry