Former law firm sues 26 Capital for $1.9 million.
The legal firm that used to represent 26 Capital (NASDAQ: ADER) is taking legal action against the special purpose acquisition company (SPAC) to reclaim around $2 million in attorney fees.
On Tuesday, Schulte Roth & Zabel requested Delaware's Court of Chancery to postpone 26 Capital's proposed liquidation, asserting the SPAC should settle creditors before they refund shareholders. 26 Capital recently declared intentions to liquidate and return money to investors following the Court of Chancery's ruling against them in a case based on a reverse merger offer involving the Okada Manila casino resort.
The law clearly indicates that Schulte Roth & Zabel deserves the compensation they earned for their extensive work on behalf of 26 Capital, and the latter cannot compensate investors before totaling payment for creditors as expressed in a statement from the firm.
Headquartered in London, New York, and Washington D.C., Schulte Roth & Zabel reportedly assigned numerous legal professionals to Jason Ader's SPAC.
Urgent Moves from Law Firm against 26 Capital
Last week, 26 Capital revealed intentions to dissolve its common stock on September 25, intending to disperse the proceeds to investors by October 13 in a non-interest-bearing trust account.
Should this occur, Schulte Roth & Zabel wouldn't have the chance to collect attorney fees from the SPAC, hence the rush in this matter.
"In conjunction with this Complaint, Plaintiff has filed a Temporary Restraining Order to maintain the status quo by hindering 26 Capital from moving any money to its shareholders without first making arrangements for payment of the amounts due to Schulte," stated the firm's submission with Chancery Court.
26 Capital's liquidation was enforced by Delaware Court of Chancery Vice Chancellor Travis Laster ruling this month that Universal Parent, the Okada Manila's parent, has no need to continue with a previously proposed merger deal between the integrated resort and the SPAC.
26 Capital was a Schulte Roth & Zabel client since August 2021, which is two months prior to the announcement of the Okada Manila reverse merger plan.
Details of 26 Capital's deal with the legal firm
In the legal document, Schulte Roth & Zabel outlines hourly rates of $1,200 to $1,695 for work done by partners, $460 to $1,270 for job duties performed by special counsels and associates, and $245 to $480 for tasks performed by assistants and practice assistants.
The firm's arrangement with 26 Capital consisted of a provision for a 33% discount on fees if the Okada Manila agreement fell through, as it did.
Schulte Roth & Zabel worked meticulously on M&A Work from August 2021 to July 2023. During this period, the firm collaborated closely with 26 Capital's management and other representatives to perform tasks such as structuring the cross-border deal, negotiate and complete the Merger Agreement, draft the registration/proxy statement with the SEC, manage 26 Capital's public disclosures regarding the proposed transaction, and oversee the process of completing the transaction.
To be specific, Schulte Roth & Zabel maintains that 26 Capital owes them $1,913,865.38.
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Source: www.casino.org
