Delaware Chancery Court Issues First SPAC (Special Purpose Acquisition Company) Decision

The Delaware Court of Chancery recently issued its first opinion involving shareholder challenges to de-SPAC transactions in In re Multiplan Stockholders Litigation. The case involved breach of fiduciary duty claims brought by the SPAC’s public shareholders against the SPAC, the SPAC’s sponsor, and the SPAC’s board of directors. Plaintiffs’ complaint stemmed from allegations that the defendants failed to make adequate disclosures in the de-SPAC transaction’s proxy statement and other documents. In largely rejecting the defendants’ motion to dismiss, the court applied the entire fairness standard, leaving open the possibility of increased litigation challenging de-SPACs and also raising key questions about the potential scope of liability of directors and officers of SPACs organized under Delaware law. Check out this article from attorneys at Freshfields Bruckhaus Deringer LLP discussing this much-anticipated decision.

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