SPACs, de-SPACs, and Sponsor Liability: Conflicts of Interest, Mismanagement Claims, Disclosure Obligations

A live 90-minute premium CLE video webinar with interactive Q&A


Tuesday, June 8, 2021

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, May 14, 2021

or call 1-800-926-7926

This CLE webinar will examine the liability risks for sponsors of special purpose acquisition companies (SPACs) and explain how a de-SPAC transaction should be structured to avoid conflicts of interest, SEC disclosure violations, and mismanagement claims.

Description

SPACs have become a preferred method for raising capital in the IPO market, and the trend has only accelerated in 2021, with over 200 SPACs formed in the first quarter. SPACs require less time and expense than a standard IPO. Still, time constraints for deal-making and sponsor conflicts of interest can create a risk of litigation when a de-SPAC transaction (merger with a target company and taking the target public) is consummated.

Sponsor conflicts of interest could give rise to shareholder claims. The SEC is increasingly focused on the incentives of sponsors, directors, officers, and affiliates to close a de-SPAC transaction that may not be in the best interests of shareholders. Failure to perform adequate due diligence and valuation of the target, or disclose any conflicts of interest, could result in SEC investigation and shareholder litigation. There are additional legal and regulatory risks in acquiring a portfolio company affiliated with the sponsor, which can affect other investment funds in which the sponsor is involved.

Listen as our authoritative panel discusses the liability risks for sponsors in forming SPACs and closing de-SPAC transactions.

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Outline

  1. SPACs: key features
    1. Streamlined IPO: shell company
    2. Two-year timeline to merge with and bring public a private company (de-SPAC transaction)
    3. Failure to close a de-SPAC transaction within two years forces unwinding of the SPAC
  2. Issues of concern for sponsors
    1. Conflicts of interest inherent in a SPAC
    2. Disclosure obligations: SPAC and de-SPAC stage
    3. Due diligence of the target company
    4. Claims of mismanagement post-closing
  3. Issues of concern for investment bankers
  4. Securities Litigation Trends
  5. Regulatory Developments

Benefits

The panel will review these and other important issues:

  • What are the reasons behind the formation of SPACs, and what are the risks in an overcrowded market?
  • How do the incentives created under SPACs differ for the sponsor and the investors?
  • What are the sponsor's disclosure obligations at the SPAC and de-SPAC stage?
  • How can mismanagement claims arise against the sponsor post-closing?
  • What special concerns should sponsors have concerning acquisitions of portfolio companies affiliated with or controlled by the sponsor?

Faculty

Brecher, Dan
Dan Brecher

Counsel; Chair, Securities and Investment Banking Group
Scarinci Hollenbeck

Mr. Brecher’s experience ranges from serving as general counsel of New York Stock Exchange and NASD/FINRA member...  |  Read More

Brenneman, Adam
Adam Brenneman

Partner
Cleary Gottlieb Steen & Hamilton

Mr. Brenneman is very active in the special purpose acquisition companies (SPAC) space and co-leads the firm’s...  |  Read More

Nussbaum, Mitchell
Mitchell S. Nussbaum

Vice Chair; Co-Chair, Capital Markets and Corporate Department
Loeb & Loeb

Mr. Nussbaum’s practice focuses on representing emerging growth companies and investment banks in initial public...  |  Read More

Attend on June 8

Early Discount (through 05/14/21)

Cannot Attend June 8?

Early Discount (through 05/14/21)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include program handouts.

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