Even After Multiplan, Pleading Standards Still Have Teeth in SPAC Cases

In 2022, the Delaware Court of Chancery decided In re MultiPlan Corp. S’holders Litig., 268 A.3d 784 (Del. Ch. 2022) (“Multiplan”), a landmark case setting the legal framework for assessing claims that the directors of a Special Purpose Acquisition Company (“SPAC”) breached their fiduciary duties in connection with “de-SPAC” mergers. Given the popularity of de-SPAC mergers, in which the SPAC merges with a private target company and takes it public, the Delaware courts have been faced with a series of cases initiated by public stockholders who did not redeem their shares at the time of the merger but became unhappy when the post-merger public companies underperformed. The focus of those cases is the redemption right: whether stockholders in the SPAC were properly informed when they made the critical decision at the time of the merger to either redeem their shares or remain invested in the newly public company.