UpHealth SPAC Lawsuit Advances Against GigCapital’s Avi Katz

Backers of the blank-check merger that took UpHealth Inc. public lost their bid Wednesday to end litigation in Delaware over claims they duped investors into approving the transaction.

Vice Chancellor Lori W. Will let the proposed class action move forward, saying it’s plausible Israeli businessman Avi S. Katz and other affiliates of GigCapital—which sponsored the shell company that combined with UpHealth—were driven by the deal’s lopsided structure to mislead shareholders about its details.

If true, the allegations show the financiers were motivated to minimize opt-outs so they could “enter a value-destructive de-SPAC merger that allowed the sponsor to make colossal ...