March 15, 2023Articles

Delman v. GigAquisitions3, LLC et al.: The Inherent Conflicts of de-SPAC Mergers

The number of Special Purpose Acquisition Company (SPAC) deals was historic in 2021 and early 2022.  Nonetheless, in 2023 an initial wave of “busted SPACs” has started, with many now approaching deadlines to consummate business mergers or consider liquidation and restructuring alternatives.  At the same time, the Delaware Court of Chancery is seeing post-merger transactions.

This article highlights the Delman case in which the Delaware Court of Chancery outlined the inherent conflict as between SPAC shareholders and sponsors in connection with the decision to vote for a de-SPAC merger and provides guidance for go-forward SPAC structures and shareholder solicitations.  The article also discusses best practices, including the use of an independent special committee or independent director, to minimize liability for post-merger claims.

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