SPAC Deals: Special purpose acquisition companies ("SPACs") boomed in 2020 as a means of taking early-stage private companies public. Following enhanced scrutiny from the Securities and Exchange Commission and the poor post-merger performance of many SPACs, the SPAC bubble burst in early 2021 as investors and dealmakers turned their attention elsewhere.
Litigation: While interest in SPACs has cooled over the last two years, litigation regarding SPACs has continued to heat up, with shareholders challenging a significant percentage of de-SPAC transactions in Delaware and federal courts. Many high-profile suits have recently survived motions to dismiss (at least in part), and at least one has been resolved through a significant settlement.
Going Forward: SPAC-related disputes have thus far focused on alleged conflicts of interest and the accuracy of disclosures regarding targets' business prospects, and those issues are likely to continue to play a leading role as more motions to dismiss are decided. While only a few decisions have been issued by the Delaware Court of Chancery so far, the standard of review applied in those cases is likely to have a significant impact on outcomes if adopted in other cases.
The Delaware Court of Chancery has denied motions to dismiss in three important SPAC cases, one of which has been resolved.
The first decision came in MultiPlan in January 2022. In re MultiPlan Corp. S'holders Litig., 268 A.3d 784 (Del. Ch....
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