Stop me if this sounds re-de-SPAC-ulous...

Section §205 hearings start tomorrow, but we dredged up some hints about what we might expect to hear.

As The Dude™️ once said, “new [redacted] has come to light.”

Yes, yes, I’ve been going on about the §205 cases in SPAC-land since they started being filed in the wake of the Boxed opinion. The whole situation is prime linguistic esoterica, my favorite kind of niche subgenre of corporate law. I mean, how could it be more perfect to intrigue all of my divergent sensibilities? Some tweaky part of mimetic pop culture pandemic hype (SPACs, who—in a very on-brand move—used some perhaps not-so-exactly precise language when they called their series of stock “Class A and Class B” but definitely didn’t mean for them to be classes of stock) meets intricate, finicky conceptual schematization issues in the Delaware General Corporate Law (DGCL) that not many people have considered on a theoretical, overarching level before (i.e., why do these different parts of the DGCL treat classes and series differently, anyway, when so many people regularly use the terms interchangeably?). This was never not going to fascinate me.

For the Court’s part, however, well, you know, the Court has a court to run. And things to do, and cases to decide, and corporations to provide confidence and security in their capital structures, and getting way down in the weeds of some minor linguistico-philosophical trivia is not going to be where the Court spends a good bit of its time. That makes good sense. And given that there’s no obvious harm, beyond whatever inherent harm arises from participation in the SPAC schema by its very nature, arising from this particular poor naming convention (please don’t call your series of stock a class when a class of a stock is a thing, and in some cases, it’s a different thing that comes with different voting rights, mmmmmkay?), because we can’t (barring objections in the upcoming hearings) point to stockholders who were convinced that they would have a separate Class A vote but then Class A and Class B all voted together and their vote ended up being massively diluted, because (again, presuming such objections don’t arise, and because they don’t logically seem to demonstrate facial, obvious harm) this really does feel like a “no harm, no foul” kind of situation. Now, the fact that some of these companies are asking for things to be ratified like their entire charter still gives me a lot of pause, and it will be very interesting to see how the Court provides certainty without allowing the Magic §205 Wand to be abused here, but Vice Chancellor Will is certainly known for her precision in action, so I have no doubt she will thread the needle exactly as she sees fit to do.

So, whence the clarity in what I think will be the outcome here? Well, thanks to our friends at Skadden Arps, who are representing View, Inc. (among others) in their §205 petition, and filed a Compendium of Authorities (as good Delaware attorneys are supposed to do) — we get to see a glimpse of what Vice Chancellor Will is feeling about these cases from her hearing in the In re Lordstown Motors Corp. case, and it seems pretty clear after reading the transcript—at least to a certain degree—how this is all going to play out. So, let’s dive in.