SPAC share restriction litigation has become one of the more technically demanding areas of securities law to emerge from the de-SPAC boom, and the legal landscape is still evolving. When investors find themselves locked out of the market by restrictions they believe were wrongly imposed, extended, or never properly disclosed, the resulting claims vary considerably in their legal theories, evidentiary demands, and the way damages are measured. After a wave of SPAC IPOs in 2025, 144 deals were completed, more than double the 57 completed in 2024. A fresh pipeline of de-SPAC transactions is underway. Counsel on both sides should expect share restriction disputes to follow.
This post examines the current state of this litigation, the distinct types of restriction claims that have emerged, how Delaware courts are applying damages frameworks, and what expert analysis looks like across these different theories.
Four Distinct Ways Investors Get Locked Out
Not every SPAC share restriction claim is based on the same legal issue. These claims can come from different agreements, involve different parties, and happen at different stages of the transaction process. Knowing these differences is important because the legal theory affects how damages are calculated. Mixing different types of claims together can also weaken a case and create problems during class certification.
Contractual lockup disputes. Post-merger, insiders and certain shareholders are typically subject to lockup agreements that restrict the sale of shares for 180 days (or longer) following closing. These agreements are standard. What’s contested is when they’re applied to the wrong shares, the wrong people, or for longer than the contract allows. Brown v. Matterport, Inc. was decided by the Delaware Court of Chancery in May 2024 and is one of the strongest recent examples of this type of dispute. In this case, Matterport’s board placed restrictions on shares owned by the company’s former CEO, even though those shares were not subject to the lockup provisions in the transaction agreements.
Vice Chancellor Lori Will awarded the plaintiff around $79 million in lost profits, based on what he could have earned if he had been free to sell the shares during that time. After adding pre-judgment interest, the total award exceeded $90 million. Matterport later appealed the ruling, and the Delaware Supreme Court heard oral arguments in February 2025.
Redemption rights impairment. This theory has generated the most Delaware fiduciary litigation. In any SPAC structure, public shareholders have the right to redeem their shares at approximately the IPO price before the de-SPAC merger closes. The Delaware Court of Chancery has described this redemption right as the “central form of stockholder protection” in a SPAC transaction. When a proxy statement contains misleading or incomplete disclosures about the target company’s financials, the sponsor’s economics, undisclosed conflicts, or material risks, shareholders can’t make an informed decision about redemption. That failure to disclose can constitute a direct breach of fiduciary duty, subject to entire fairness review.
PIPE investor funding breaches. PIPE (Private Investment in Public Equity) investors agree to provide money to help complete a de-SPAC transaction. In return, they usually receive shares that come with registration rights and some limits on when they can be sold. In some situations, PIPE investors did not provide the promised funding and were sued for breach of contract. In other cases, the investors argued that the required conditions for closing the deal had not been met. These disagreements led to disputes about whether their funding obligations were valid and whether the related share restrictions could legally be enforced.
Rule 144 and registration delays. Even after a contractual lockup period ends, SPAC investors may still be unable to sell their restricted shares under Rule 144 until one year has passed since the business combination was completed. The SEC has explained that simply meeting the Rule 144 holding period may not be enough when the shares were issued as part of a SPAC transaction. If registration statements are delayed, filed incorrectly, or not filed on time, investors may have to wait even longer before they can sell their shares freely. In a falling market, these delays can lead to significant financial losses and have a major impact on investors.
The Delaware Playbook: What It Takes to Survive Dismissal
Delaware’s Court of Chancery has now issued enough rulings in SPAC fiduciary cases to establish a meaningful body of pleading law. The outcomes haven’t been uniform, and they’re instructive.
In re MultiPlan Corp. Shareholders Litigation, the court reviewed the case under the entire fairness standard and found that the loss of redemption rights caused direct harm to public shareholders. The case was later resolved through a settlement of $33.75 million.
In re Hennessy Capital Acquisition Corp. IV was dismissed in May 2024. The court explained that a sharp drop in stock price after the merger, along with general concerns about sponsor conflicts, is not enough to support a claim. Plaintiffs must clearly point to specific information that was not disclosed and show how that missing information affected the redemption decision. They also need to explain why a reasonable shareholder would have chosen to redeem their shares if that information had been provided at the time.
In re Skillsoft Shareholders Litigation was dismissed in February 2025. The court found that the sponsor did not receive any special benefit that was different from what other shareholders received. Because of that, one of the main requirements for applying the entire fairness standard was not met, and the case could not move forward under that level of review.
Northern Genesis Acquisition Corp. provides a more recent example pointing in the opposite direction. In December 2025, Vice Chancellor Morgan Zurn declined to dismiss claims for breach of fiduciary duty and unjust enrichment, allowing the lawsuit to move forward. The key reason was that the plaintiffs provided enough details about sponsor conflicts and alleged failures to properly disclose important information.
The overall trend shows that Delaware courts are willing to hear these types of cases, but they expect clear and detailed facts. General claims about conflicts of interest are usually not enough to move a case forward. However, specific and well-supported claims that important information was left out, and that those omissions influenced real shareholder decisions, are much more likely to succeed.
The Delaware Supreme Court gave important guidance on the statute of limitations in February 2026 through the GigCapital2/UpHealth case. The court ruled that the standard three-year filing period starts on the date of the alleged wrongful action, not when the deal closes or when the damage is later discovered. This decision is particularly important for de-SPAC transactions, where a significant amount of time can pass between the signing, approval, and closing of a deal. Because of this ruling, some claims may be dismissed if they are not filed within three years of the alleged misrepresentation, even if the plaintiff only became fully aware of the losses at a later time.
The Expert Analysis Challenge: Competing Damages Frameworks
This is where the litigation gets complicated for experts, and it’s where inadequate expert work can unravel an otherwise strong case.
SPAC share-restriction damages don’t neatly fit into a single model. The presence of the redemption option and the different economic positions of investors who redeemed versus those who held into the post-merger market creates at least two distinct damage cohorts that courts are increasingly treating as analytically separate.
The Redemption Class includes investors who could not properly use their redemption rights because the information provided to them was incomplete or misleading. For this group, damages are usually calculated by comparing the trust redemption value they should have received, including any earned interest, with the actual financial result they experienced. While this calculation is generally more limited in scope, it still involves carefully rebuilding the redemption process and showing what investors would likely have done if accurate information had been available. That part of the analysis can be challenging and requires detailed review.
The Market-Loss Class includes investors who bought shares through the open market, usually after the de-SPAC merger took place, and later faced losses when the actual financial condition of the target company was revealed. This group needs a standard event-study damages model that examines how the share price was affected, proves that the losses were linked to the misconduct, and separates fraud-related price declines from normal changes caused by overall market conditions.
These two groups are based on different ways of measuring value, use different calculation methods, and may even need different class definitions. Courts have raised concerns about whether they should be treated as one class, which puts pressure on the plaintiffs’ experts to either support a single damages model or create separate damages calculations. If subclasses are needed, experts must perform both analyses separately and present the court with total damages broken down by each group, both for class certification and for later allocation of damages among class members.
For lockup disputes like Matterport, the expert problem is different but equally demanding. The question is what the restricted shares would have been worth had the plaintiff been free to sell. That requires a market impact analysis, specifically, whether selling pressure from a block of shares over a realistic trading window would have depressed the price, and by how much. Brown v. Matterport featured contested expert testimony on exactly this point, with the court ultimately adopting a measured trading approach over a multi-day window to arrive at the $79 million lost-profits figure.
What This Wave of Litigation Requires from Expert Witnesses
De-SPAC litigation investor claims impose analytical demands that generalist financial experts are often ill-equipped to handle. The fact patterns are complex. The damage frameworks are unsettled. Opposing experts frequently argue for materially different models, and courts rely heavily on the quality and clarity of the expert’s methodology to decide between them.
The expert must have a strong understanding of how SPACs work, including trust account structures, redemption processes, sponsor incentives, PIPE investments, and the timing of important information shared with investors. They should be able to build and defend different damages models at the same time, clearly explain the differences between investor groups to a court that may not know much about SPACs, and analyze what would likely have happened in an alternative scenario using solid data and careful calculations instead of assumptions.
I bring this combination of expertise to SPAC share restriction matters. I hold a PhD in Economics, am a CFA charter holder, and have more than 16 years of experience serving as a testifying and consulting expert witness in complex securities cases. I have been deposed in federal court on damages assessment in a SPAC restricted stock sale dispute. My work includes multibillion-dollar disputes involving financial products, pricing evaluations, and damages calculations.
I prepare my analyses to stand up to detailed questioning in court. When handling SPAC damages matters, I begin by reviewing the deal structure and the investor groups involved, then carefully apply the proper valuation and damages quantification methods before reaching and supporting my conclusions. I have worked for both plaintiff and defense counsel, and my opinions follow the evidence rather than the retaining party’s preferred outcome, which is ultimately what makes expert testimony credible.
The interaction between fiduciary duty claims, federal securities claims, and contract-based share restriction theories in a single case is exactly the kind of multi-layered complexity that benefits from an expert who can analyze financial issues from multiple vantage points simultaneously.
The Road Ahead
The SPAC share restriction litigation cycle is not over yet. In fact, it may be moving into a new stage. Most of the current lawsuits come from de-SPAC transactions completed during 2021 and 2022. The 144 SPAC IPOs launched in 2025 are expected to create a new round of mergers and related legal disputes over the next 18 to 36 months. Lawyers who take the time to understand the current legal framework today will be in a stronger position to handle those future cases when they begin to emerge.
For plaintiffs, the cases that have moved forward after dismissal attempts have one thing in common: they include specific and well-supported claims based on clear disclosures or important information that was left out. They also show a direct explanation of how the share restriction or the faulty proxy statement affected an investor financially. General claims about conflicts of interest or losses after the merger are usually not enough to support a successful case.
For defendants, recent legal developments provide several useful defenses. These include rules about when the statute of limitations begins, the strict requirements for proving redemption impairment claims, and the possibility of having entire-fairness claims dismissed when there is no evidence that sponsors received a special benefit unavailable to other investors. However, using these defenses successfully requires careful and detailed economic analysis supported by strong evidence. Either way, the quality of the expert analysis is frequently what decides the outcome.
Engage a Financial Expert Witness Who Understands SPAC Share Restriction Litigation
SPAC share restriction claims are technically demanding, factually intensive, and analytically unsettled enough that the expert you retain matters. Dr. Pavithra Kumar provides rigorous, court-tested financial analysis for counsel navigating complex SPAC disputes on both sides of the case.