Wall Street’s affair with blank-check firms, the finance fad that pushed companies onto the stock market during the Covid-19 pandemic, ended this year with a string of big bankruptcies and even bigger losses for shareholders.

At least 21 firms that went public by merging with special purpose acquisition companies, or SPACs, went bankrupt this year, according to data compiled by Bloomberg. Measured from their peak market capitalizations, the insolvencies bookend the loss of more than $46 billion of total equity value.

The failures span money-losing electric vehicle startups and forward-thinking farming companies. Blank-check firms were good at propelling their targets to the public market even when they lacked well-formed financials, said Gary Broadbent, an executive guiding former SPAC AppHarvest Inc. through its liquidation. Many weren’t “ready for primetime,” he said.

Some were more promising than others, but all drew dollars from excitable investors caught up in the SPAC craze, including mom—and-pop traders. Plenty of shareholders are now suing SPAC sponsors over their losses.

The largest SPAC bankruptcies included that of flexible workplace provider WeWork Inc., which boasted a $9.4 billion market value after going public in 2021. It succumbed to Chapter 11 last month with plans to jettison expensive office leases. Electric vehicle makers Proterra Inc. and Lordstown Motors Corp. also carried sizable market values, topping out at roughly $3.7 billion and $5 billion, respectively, before filing for bankruptcy earlier this year.

Many of these companies sought protection from creditors less than two years after going public. Software firm Near Intelligence Inc. filed Chapter 11 in December, less than 9 months after its stock debuted on the Nasdaq.

Of course, many predicted the ongoing wave of bankruptcies. Critics called the SPAC frenzy a bubble soon after it began.

Going public via SPAC has historically been faster and faced less scrutiny than traditional initial public offerings. During the boom, companies targeted by blank-check firms also often made more optimistic projections about the trajectory of their businesses than would be seen in old-fashioned IPO processes.

Plus, arrangers had incentives to complete less-than-pristine mergers. Early investors could redeem SPAC shares at $10 if they didn’t like the deal, for one. Excitement over meme stocks and the promise of high valuations encouraged private companies to complete blank-check mergers at a rapid pace, said Usha Rodrigues, a law professor at the University of Georgia who has studied SPACs.

The result was a glut of SPACs which Rodrigues described as “a ticking time bomb” of corporate failures that materialized in 2023. “Everyone should have seen this cliff coming,” Rodrigues said.

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