November 14, 2024
Investors in a December 2020 blank-check company merger that took hybrid-car retrofit venture XL Fleet public have preliminarily settled a four-count fiduciary duty breach suit in Delaware’s Court of Chancery for $4.75 million.
The deal, which would end a lawsuit filed in September 2021 if approved, emerged from final settlement talks underway since at least September of this year, when the parties asked Chancellor Kathaleen St. J. McCormick to take a proposed trial off the court’s calendar.
A brief in support of the agreement had yet to be filed on Thursday afternoon, but a stipulation noted the deal was reached in September after two negotiation sessions, in May 2023 and July 2024, mediated by Jed Melnick of JAMS that ended without a resolution.
Surviving to settlement were all or most of five counts in the original six-count suit alleging breach of fiduciary duty and unjust enrichment against company directors, officers and controllers, as well as a direct claim for beach of contract against the SPAC, Pivotal II, which became XL Fleet in a reverse merger.
According to the complaint, Pivotal II breached a representation that it would enter into a merger with a company having a fair market value of at least 80% of the assets held in Pivotal’s trust account, or $178.4 million. “Legacy” XL, the company taken public, was valued at only $55 million.
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The stockholders are represented by Michael J. Barry, Casimir O. Szustak and David T. Wissbroecker of Grant & Eisenhofer PA, Richard A. Speirs and Alexandra Gray of Cohen Milstein Sellers & Toll PLLC, and Peretz Bronstein and Eitan Kimelman of Bronstein Gewirtz & Grossman LLC.
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