A proposed $10 million settlement has been submitted in the Delaware Court of Chancery to resolve a shareholder lawsuit stemming from the 2020 merger between online gaming platform Skillz Inc. and Flying Eagle Acquisition Corp., a special purpose acquisition company (SPAC). The lawsuit originally sought $13.5 million in damages.
The legal dispute centered on allegations that the SPAC’s leadership failed to adequately evaluate or disclose details related to the merger, which ultimately valued Skillz at $3.5 billion. According to court filings, Skillz stock traded above the $10 redemption price for several months following the merger, weakening the defense’s position that shareholders suffered no harm.
Despite this, plaintiffs’ counsel noted that the $10 million recovery represents a strong outcome given the complex valuation dynamics and trading history of Skillz shares. The settlement was reached following multiple rounds of negotiations and with the assistance of Jed Melnick of JAMS (Judicial Arbitration and Mediation Services Inc.). Vice Chancellor Paul A. Fioravanti stayed the case in April at the plaintiffs’ request to facilitate resolution discussions.
A hearing on the proposed settlement is scheduled for September 2, during which class counsel will also request $1.75 million in attorneys’ fees.
The case alleged that Flying Eagle’s board, controlled by Eagle Equity Partners II LLC, held only two merger-related meetings without producing any formal records or due diligence presentations. The SPAC’s structure allowed its sponsors to receive millions of shares and warrants for nominal amounts, which would have become worthless without a successful merger.
In May 2024, Vice Chancellor Fioravanti denied the defendants’ motion to dismiss, stating it was “reasonably conceivable” that the merger with Skillz had been prearranged even before Flying Eagle’s IPO, supporting claims of inadequate board oversight.
Approximately 69 million publicly held Flying Eagle shares were outstanding at the time of the merger, with only 2,140 shares redeemed at the $10 price. The settlement agreement waives any future claims related to the merger, registration materials, or the conduct of controlling parties.
No objections to the proposed settlement have been filed.
The stockholder plaintiffs are represented by attorneys from Bernstein Litowitz Berger & Grossmann LLP and Robbins LLP. The defendants, including Eagle Equity Partners II LLC and affiliated individuals, are represented by Richards Layton & Finger PA and White & Case LLP.
