US law firm Schulte Roth & Zabel is suing its former client 26 Capital Acquisition Corp to recover more than $1.9 million in legal fees following the special acquisition company’s failed merger with the Philippines’ largest casino.
The law firm on Tuesday asked Delaware’s Court of Chancery to block 26 Capital, a SPAC, from dissolving before it pays its alleged legal fees. Schulte had advised 26 Capital on its planned $2.5 billion SPAC merger with Okada Manila, an affiliate of Japan’s Universal Entertainment.
A Delaware chancery judge earlier this month refused to order Okada Manila to complete the merger in part because of disclosure failures in the deal, finding that 26 Capital “engaged in conduct that should not be rewarded” by forcing the merger to close.
If completed, the deal would have generated $275 million for the casino.
“The law is clear that we are entitled to the fees we earned for the substantial work we did on behalf of 26 Capital and that 26 Capital cannot redeem investors before it makes provision for the payment of creditors,” the firm said in a statement.
Representatives for 26 Capital did not immediately respond to requests for comment.
Last week, 26 Capital said it would dissolve entirely, liquidating its trust account and distributing its assets to its stockholders. Such a move would prohibit Schulte from recovering any unpaid legal fees, the firm alleged in its lawsuit.
Schulte, which has more than 300 lawyers in New York, Washington, D.C., and London, said it has devoted hundreds of hours to finance and merger-related legal work for 26 Capital. — Reuters
