Schulte Sues 26 Capital over Unpaid Fees

Schulte Roth & Zabel, an American law firm, has launched a lawsuit against its former client 26 Capital Acquisition, a special purpose acquisition company. According to a Reuters report, the law company now seeks to recover almost 2 million in legal fees.

The report says that Schulte Roth & Zabel contacted the Delaware Court of Chancery, asking it to block 26 Capital Acquisition from dissolving before it has paid all fees it owes ($1.9 million, according to Schulte).

26 Capital announced its plans to dissolve last week. The move would see the company liquidate its trust account, distributing all of its assets to stockholders. However, if the company proceeds with its dissolution, Schulte would be unable to recover any unpaid fees, the latter company pointed out in the lawsuit.

Schulte Roth & Zabel Wants to Be Paid for Its Efforts

For reference, Schulte Roth & Zabel served as the legal advisory firm that provided advice to 26 Capital ahead of its planned merger with Okada Manila, a Philippine casino giant. The deal, which eventually failed, would have generated $275 million for the operator.

Earlier this month, Vice Chancellor Travis Laster said that the court will not force Okada Manila to complete its merger with 26 Capital. According to Laster, 26 Capital had tried to force the deal, which was described as “conduct that should not be rewarded.”

Commenting on the current lawsuit, Schulte Roth & Zabel pointed out that it still should receive the fees it has earned through its hard work, even if the merger with Okada Manila did not go through. In a statement, the company clarified:

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.

For reference, Schulte employs over 300 lawyers across its offices in New York, Washington DC and London. The company claims to have dedicated hundreds of hours of finance and merger-related work to the merger and would like to receive compensation for its efforts.  

Reuters said that 26 Capital is yet to comment on the matter.

In other news, Okada Manila is doubling down on promoting itself as an attractive tourist destination in the wake of the recent occupation.