Law firm Cooley LLP is at the center of a contentious lawsuit filed in Delaware Chancery Court, accusing the firm and other defendants of misleading actions in a special purpose acquisition company (SPAC) merger. The complaint was lodged by a family trust representing Marci Donovitz, the ex-wife of Biote’s founder, Dr. Gary Donovitz.
The lawsuit revolves around the 2022 merger of Biote Holdings with Haymaker Acquisition Corp. III, a SPAC that had raised over $315 million to execute mergers. According to the plaintiff, Cooley and other parties involved failed to disclose vital details about the faltering deal, leading to substantial dilution of the trust’s shares—from 45% ownership to 34.5%.
The core allegation claims that Cooley lawyers, including partner Ryan Sansom, tricked Dr. Gary Donovitz into waiving a clause that allowed him to cancel the merger if it did not provide at least $5 million in net cash to the company. With a majority of SPAC investors opting to redeem their shares at face value, Biote found itself with almost no cash from the acquisition, leaving the company with “negative tangible assets.”
This contentious situation echoed an earlier legal dispute settled in April 2024, wherein Gary Donovitz agreed to sell his Biote shares for approximately $77 million. Marci Donovitz’s suit contends that Cooley lawyers threatened her ex-husband with personal liability of up to $70 million if the merger did not proceed. Consequently, Donovitz signed a waiver, inadvertently relinquishing his right to demand the $5 million net cash condition.
The family trust asserts that the defendants, including Cooley, Haymaker SPAC’s founders, and company insiders, reaped about $135 million while the trust endured diminished ownership and significant debt. The plaintiffs are seeking monetary damages against what they term “disloyal fiduciaries and those who aided them.”
“The lawsuit reveals the inner workings of a scheme to enrich a few at the expense of the owner who built the company,” remarked William A. Brewer III, a partner at Brewer, Attorneys & Counselors, and counsel for Marci Donovitz. The Brewer firm also represented Gary Donovitz in his earlier settled case against Biote.
Representatives for Cooley, including Sansom, have not yet responded to requests for comment.
The case is officially documented as: The Donovitz Family Irrevocable Trust v. Teresa S. Weber, et. al., Del. Ch., 2024 0617, 6/5/24.
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