On January 3, 2022, in a case of first impression, the Delaware Court of Chancery examined the viability of fiduciary duty claims against special purpose acquisition company (SPAC) directors in the context of a de-SPAC transaction. Addressing a complaint brought by former stockholders of Churchill Capital Corp. III, a SPAC, alleging that material facts were omitted from the proxy statement issued in connection with its de-SPAC merger with Multiplan, Inc., the Court held that the stockholders stated a plausible claim for breach of fiduciary duty, thus impairing stockholders’ right to make an informed decision on whether to redeem their shares. The Court also found that the entire fairness standard of review – and not the more lenient business judgment rule – applied to the de-SPAC merger due to “inherent conflicts between the SPAC’s fiduciaries and the public stockholders in the context of a value-decreasing transaction.”
January 13, 2022
