The Delaware Court of Chancery recently issued two decisions addressing claims arising out of so-called "de-SPAC" mergers. Each decision is quickly becoming required reading for SPAC sponsors, boards and transactional planners.

First, a little background. As explained by the court, a special purpose acquisition company (or SPAC) is "a shell corporation … that lacks operations and takes a private company public through a form of reverse merger." Sponsors, who are typically an "individual or management group," "administer" the SPAC and fund the underwriting fees and working capital of the SPAC in exchange for "founder shares." In order to raise the capital to acquire a private target, the SPAC will conduct an initial public offering (IPO). The proceeds from the IPO are held in a "trust" during the lifetime of the SPAC. The IPO investors "have a right to redeem their shares" after the acquisition target is selected, which "essentially guarantees public IPO investors a fixed return."