Chancery Reviews SPAC Precedents and Dismisses Complaint for Failure to Show Impairment of Stockholders’ Redemption Rights

In In re MultiPlan Stockholders Litigation, the Delaware Court of Chancery reasoned that common special purpose acquisition company (SPAC) governance and compensation structures create potential conflicts between on the hand, the sponsors holding founders' shares—whose compensation is tied to, and who tended to profit greatly from, any transaction, however poor; and on the other hand, public stockholders—who could lose their investments in a poor de-, and who have redemption and liquidation rights permitting the return of their original investments without having to participate in one. See 268 A.3d 784 (Del. Ch. 2022). Originally published in the Delaware Business Court Insider, on June 19, 2024.
Source: Chancery Reviews SPAC Precedents and Dismisses Complaint for Failure to Show Impairment of Stockholders' Redemption Rights