DealLawyers.com Blog

Over on the D&O Diary, Sarah Abrams wrote about the Delaware Superior Court’s decision in View v. Starstone (Del. Superior; 3/26), finding that the “public offering” exclusion of the de-SPACs D&O policy did not preclude coverage for claims arising out of the de‑SPAC transaction and that additional payment conditions could not be imposed unless expressly stated in the policy. Sarah calls the underlying facts “a now-familiar de-SPAC trajectory.” That is, the resulting entity faced an audit committee investigation, an SEC investigation, a securities class action and derivative litigation — all related to alleged misstatements during the transaction.

View then sought coverage under its D&O program for defense and settlement costs arising from these proceedings. While most insurers participated, one carrier denied coverage, relying primarily on a “public offering” exclusion and separately arguing that it had no payment obligation until defense costs were actually paid. [. . .] The insurer contended that the de-SPAC transaction functioned as a public offering of View’s securities, even if structured through the SPAC parent.

That “substance over form” argument didn’t sway the court.

The Delaware Superior Court rejected the insurer’s coverage position and granted summary judgment in favor of View on the core issues, emphasizing that policy language must be applied as written and exclusions construed narrowly under Delaware law. The court held that the “public offering” exclusion applies only where there is an offering of the insured entity’s own equity securities. Because the transaction involved shares issued by the SPAC parent, not View, the exclusion did not apply.

– Meredith Ervine