Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
SPAC Transaction Challengers Face Uphill Battle
Special purpose acquisition companies, or SPACs, have grown in popularity over the past decade, and as a result, more than 30% of all transactions that took companies public in 2021 involved a de-SPAC merger. The rise in SPACs' popularity led to the rise of SPAC-related litigation, especially following the poor performance of many companies taken public by SPACs. Recent decisions by the Delaware Court of Chancery demonstrate that when a SPAC transaction and the disclosures surrounding it are challenged, defendants may face an uphill battle to prevail on a motion to dismiss, especially where breach of fiduciary duty claims have been asserted.
Understanding how SPAC transactions work is critical to understanding the challenges that defendants may face in litigation involving a SPAC. A SPAC is a company that lacks business operations and tangible assets, but is formed by a sponsor to raise capital through an initial public offering (IPO) for the purpose of merging with, or acquiring, an existing company. The sponsor, which oftentimes is a limited liability company, is also responsible for administering the SPAC, and is typically compensated in the form of founders shares from the SPAC's post-IPO equity, which are acquired at a large discount.
Funds that are raised in the initial IPO are placed in a trust account, and they cannot be disbursed except to facilitate an acquisition. Thus, the sponsor will cover items like the SPAC's underwriting fees and expenses. If an acquisition cannot be completed by the time specified in the SPAC's charter, then the funds in the trust account must be returned and the SPAC must be liquidated.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
Role and Responsibilities of Practice Group Leaders
Ideally, the objective of defining the role and responsibilities of Practice Group Leaders should be to establish just enough structure and accountability within their respective practice group to maximize the economic potential of the firm, while institutionalizing the principles of leadership and teamwork.