In a high-stakes legal showdown that could reshape the trajectory of SPAC-backed ventures, the Delaware Court of Chancery has ruled that most claims in a suit against key figures behind the Archer Aviation $1.7B SPAC deal will proceed to trial. The case alleges a web of overhype, misleading disclosures, and self-enrichment in the electric aircraft maker’s path to going public.
Vice Chancellor Lori W. Will, speaking by teleconference, allowed four out of five counts to move forward after heated April arguments, retaining breach of fiduciary duty and unjust enrichment allegations against a roster that includes billionaire Ken Moelis and his namesake firm, Moelis & Co.
Allegations Take Flight: “Sham” Aircraft Claims and Market Freefall
At the heart of the suit are claims that Moelis and others painted a wildly inflated picture of Archer Aviation’s prospects. Plaintiffs accuse the SPAC sponsors of hyping a futuristic air taxi — the “Midnight” tilt-rotor aircraft — through selectively edited footage and sky-high promises of 150 mph speeds and 60-mile ranges.
But according to the complaint, what investors got instead was a glorified hovercraft. In footage released before the 2021 merger, the prototype only managed to lift a few feet off the ground — a maneuver the plaintiffs say took two years to achieve and barely qualified as a milestone.
Investors who clung to their shares rather than redeeming them for $10 saw them plummet to under $3 by early 2022. The suit claims this nose-dive confirms that the SPAC merger “was nowhere close to being entirely fair.”
