A number of companies that went public by merging with SPACs had hearings at the Delaware Chancery Court Feb. 20 regarding a snafu in dual-class stock structures, per Axios.
More than 20 companies seek retroactive validation for common stock issued as part of a SPAC merger.
Most of the companies say they may have issued millions of shares without stockholder authorization—in some cases hundreds of millions—after misreading, or getting bad legal advice about, an obscure statutory provision, Bloomberg reported last week.
Now they face uncertainty about their capital structure, with potentially chaotic consequences for the status of their stock and shareholders.
So far, it seems that the court has granted the request to have their structures essentially blessed. However, the judge’s opinions, which are expected today will shed more light on the specifics of the cases and legal reasoning.
This case is important because several more such companies have filed similar requests, but the exact details of each situation and request to the court (some are broader than others) may mean different outcomes.
