ANALYSIS: Chancery SPAC Litigation Faces Crossroads

Amid a deluge of so-called MultiPlan challenges to de-SPAC transactions, the Delaware Court of Chancery in May granted a motion to dismiss such an action for the first time, showing that these suits aren’t bulletproof and that plaintiffs must still adequately plead their claims.

Yet despite this setback for plaintiffs, recent Chancery Court litigation indicates that the plaintiff-friendly “entire fairness” standard will continue to be applied to these suits, allowing them to survive motions to dismiss.

The 2022 Chancery opinion In re MultiPlan Corp. Stockholders Litigation, was a seminal case holding that SPAC (special purpose acquisition company) shareholders could ...