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Lori Marks-Esterman Quoted in Article on SPAC Litigation in the Delaware Court of Chancery

February 22, 2023

Olshan Chair of Litigation Lori Marks-Esterman was quoted in a article (subscription required) on the recent proliferation of cases in the Delaware Court of Chancery filed by SPAC-merged companies asking the Court to retroactively validate share issuances. The cases stem from the Court’s decision in Garfield v. Boxed Inc., where the Court granted plaintiff’s application for attorney fees following the plaintiff’s demand to the company that his class of stock was entitled to a separate vote under Delaware law. “The Garfield case, for me, sort of flew under the radar because it was a fee application,” Lori said. “That’s what the case is about, but part of the fee application is whether corporate benefit was conferred, and part of that analysis was, was the plaintiff right? That is what led to V.C. Zurn’s statements in her decision, which included language that had the share increase gone forward and the voting structure gone uncorrected, the new shares would [have] be[en] invalid.” Lori observed that this surge of petitions is the latest hurdle for SPACs, a corporate structure that escalated during the pandemic: “This is another example of the challenges and potential pitfalls of SPAC mergers. Maybe the takeaway is there’s no shortcuts in life. SPACS avoid the laborious process of an IPO, but like anything in life, there’s consequences to shortcuts.”

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