Tuesday, April 16, 2024

NewsHorizon

Where your horizon expands every day.

Business

A judge stops the termination of a SPAC after a law firm files a lawsuit for payment for its services in a unsuccessful merger.


A judge in Delaware has issued a temporary halt to a special purpose acquisition company’s decision to dissolve, following a lawsuit from its former law firm Schulte, Roth & Zabel. The firm is seeking to recover over $1.9 million in legal fees for their services on a merger that ultimately fell through with the Philippines’ biggest casino.

The Vice Chancellor of Delaware’s Chancery Court, Travis Laster, approved Schulte’s request for a temporary restraining order on Wednesday. This order will prevent their former client, 26 Capital Acquisition Corp, from dissolving and liquidating before paying their legal fees.

Schulte advised 26 Capital on its planned $2.5 billion SPAC merger with an affiliate of Japan’s Universal Entertainment that owned the Okada Manila casino resort.

Earlier this month, Laster declined to mandate that Okada Manila finalize the merger due to issues with the deal’s disclosures. Laster determined that 26 Capital’s actions were not deserving of being compelled to complete the merger.

The company without a specific purpose announced last week that it will completely disband, selling off its trust account and giving its assets to its shareholders by Oct. 13.

The company claimed in their lawsuit on Tuesday that such an action would prevent Schulte from receiving any outstanding legal fees.

Judge Laster’s ruling stated that the temporary restraining order will end on October 11. He approved the law firm’s request to speed up the proceedings and mentioned that a hearing will take place within 10 business days.

26 Capital stated that it will oppose these baseless lawsuits. The company expressed concern over SRZ’s attempt to disrupt the efficient and timely return of investor funds to their rightful recipients.

Schulte, which has more than 300 lawyers in New York, Washington, D.C., and London, said it has devoted hundreds of hours to finance and merger-related legal work for 26 Capital.

A representative from Schulte stated on Thursday that the company has no further remarks other than their previous statement. Their statement stated that according to the law, the company has the right to receive compensation for the services they provided to 26 Capital.