Former executives of a health technology company that went public through a SPAC merger have agreed to pay $10 million to resolve investor claims tied to the company’s collapse, according to a recent court filing in California federal court.

Investors asked a Los Angeles judge this week to grant preliminary approval to the settlement, calling it a strong outcome given the risks and costs of continuing litigation. The proposed agreement would resolve claims that executives misled investors about the company’s product development timeline before the business filed for bankruptcy.

The lawsuit stems from a 2021 merger involving SC Health Corp., a special purpose acquisition company, and Rockley Photonics Holdings Limited. Following the transaction, the combined entity operated as Rockley Photonics Cayman Limited. Investors allege that optimistic projections made during the merger process sharply conflicted with the company’s actual technical readiness.

According to court filings, company leadership suggested its health monitoring technology for consumer wearable devices would reach commercialization by mid-2022, with significant revenue growth expected in subsequent years. Investors claim those projections were unrealistic because essential hardware development did not begin until late 2021, making the promised timelines unattainable.

The proposed settlement covers investors who purchased shares between March 2021, when the merger was announced, and January 2023, when the company filed for bankruptcy. Plaintiffs argue the bankruptcy effectively wiped out shareholder value.

The executives included in the settlement are the company’s former chief executive officer and two former chief financial officers. Other defendants previously named in the case have already exited the litigation.

Investors said the $10 million settlement represents more than 30% of the maximum potential damages they might have recovered at trial, placing the agreement within a reasonable range for approval.

Attorneys for both sides did not immediately comment on the settlement. If approved, the agreement would bring the securities class action to a close.

The case remains before the U.S. District Court for the Central District of California.