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ARTICLE · 02 OCTOBER 2020

Are You Covered? Insurance Options For SPACs

Mayer Brown
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SPACs continue to be the hot topic of the day. Over a course of what seems like a few months they have catapulted from being a questionable fringe financial vehicle...

United StatesInsurance
Yelena Dunaevsky (Woodruff Sawyer)
Yelena Dunaevsky (Woodruff Sawyer)
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SPACs continue to be the hot topic of the day. Over a course of what seems like a few months they have catapulted from being a questionable fringe financial vehicle to the most talked-about, fashionable fundraising and investment alternative to IPOs. Much has been written about their structure, their positives and their negatives, and, of course, the celebrities and billionaires that have embraced them. Very little attention, however, has been paid to whether, should anything go wrong, a SPAC can be protected by insurance. Indeed, there continues to be a significant amount of confusion as to the types of insurance a SPAC needs or can obtain during its lifespan.

The insurance needs of the SPAC are different at each phase of its existence. At the IPO, the SPAC sponsor team needs to obtain directors and officers (D&O) insurance to protect itself from potential claims and to attract knowledgeable, well-recognized directors (all of whom typically demand substantial D&O cov

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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