Well, that didn’t take long.
Special Opportunities Fund today announced that it has filed a class action lawsuit in the Delaware Court of Chancery against FAST Acquisition to prevent insiders from appropriating FAST’s net assets through the dissolution of the SPAC.
FAST a week ago today announced it would liquidate and return its cash in trust to investors. However, the SPAC also disclosed that management intends to keep a breakup fee of up to $33 million from former merger partner Fertitta Entertainment.
Fertitta called off a deal with the SPAC last December. That agreement called for Fertitta to pay Fast Acquisition $26 million if the SPAC had not completed another deal by Aug. 1 of this year and subsequently decided to dissolve operations, which FAST has now done.
Fertitta has already paid $6 million to the SPAC plus a $1 million loan following the breakup, according to regulatory filings. In a 10-Q filing, Fast Acquisition states, “any funds received pursuant to the Settlement Agreement that are remaining after the payment of expenses will not be part of any distributions with respect to the Public Shares.” From that filing, it appears Fast Acquisition’s sponsor intends to receive a nice payout on a deal that didn’t get done.
The complaint filed by investor Special Opportunities Fund contends that FAST’s board of directors has a fiduciary duty to distribute its net assets equitably to all stockholders in a dissolution.
Phillip Goldstein, Chairman of SPE and a managing partner of Bulldog Investors, SPE’s investment advisor, said, “We have seen some brazen self-serving schemes by public company insiders over the years but the attempt by a SPAC sponsor, after failing to achieve a business combination, to grab a parting gift for itself and management at the expense of the SPAC’s public stockholders, as it intends to do here, represents a new low in corporate governance.”
Morris Kandinov is serving as counsel to SPE in the litigation. Read more.
