Attorneys rush to SPACs' defense

A Lady Justice statue is seen at the Delaware Supreme Court in Dover, Delaware
A Lady Justice statue is seen at the Delaware Supreme Court in Dover, Delaware, U.S., June 10, 2021. REUTERS/Andrew Kelly

NEW YORK, Aug 31 (Reuters Breakingviews) - The joke goes that if you ask two lawyers you get three opinions. In the latest twist for special-purpose acquisition companies, though, nearly 60 corporate law firms have put their names to a shared rejection of recent legal action against blank-check vehicles. It suggests a clear-cut case, a serious business threat, or both.

Shareholder lawsuits against investor Bill Ackman’s Pershing Square Tontine Holdings (PSTH.N) read more and other SPACs claim the vehicles – which raise cash with the goal of finding a merger target – should be regulated far more tightly under a U.S. law governing investment companies that hold securities read more . It creates uncertainty not only for the vehicles targeted directly but for hundreds of other SPACs.

In their response, the legal eagles say the lawsuits are “without factual or legal basis.” Going public with that stance suggests they genuinely have little doubt. But all but a dozen of their firms also feature in league tables for SPAC attorneys compiled by SPAC Research, currently topped by Kirkland & Ellis and Skadden, Arps, Slate, Meagher & Flom. That’s another explanation for the show of unanimity: The blank-check phenomenon is a fee stream worth defending. (By Richard Beales)

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Editing by Lauren Silva Laughlin and Marjorie Backman

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