PureCycle Technologies has faced three major investor lawsuits since going public through a 2021 SPAC merger. A securities fraud class action in Florida settled for $12 million with final approval in October 2024. A separate shareholder derivative case settled for $3 million from the company’s insurers plus a package of governance reforms. A third securities case, filed later in New York over problems at PureCycle’s Ohio plant, was dismissed with prejudice in January 2025.
What Triggered the Lawsuits
On May 6, 2021, short-seller Hindenburg Research published a report titled “PureCycle: The Latest Zero-Revenue ESG SPAC Charade, Sponsored By The Worst Of Wall Street.” The report claimed PureCycle’s executives had previously taken six other companies public — two ended in bankruptcy, three in delistings, one in an acquisition after a roughly 95% share price collapse — destroying more than $760 million in shareholder value along the way. It said management’s motive for the SPAC deal was to collect tens of millions in cash bonuses and tradable stock before any revenue came in.1Hindenburg Research. PureCycle: The Latest Zero-Revenue ESG SPAC Charade
On the technology, Hindenburg quoted a polymer expert who called PureCycle’s pressurized recycling process a “bomb” and warned against scaling it while lab-level problems persisted. The report described the company’s patents as “vague” and a “regurgitation of prior art,” noted the absence of peer-reviewed validation, and dismissed projected EBITDA margins above 50% as “wild ass guessing.”1Hindenburg Research. PureCycle: The Latest Zero-Revenue ESG SPAC Charade
PureCycle’s stock fell from $24.59 to $14.83 in a single day, roughly 40%.2Fenwick. Ciecko v. PureCycle Technologies, Inc. The SEC opened its own investigation, issuing a subpoena in late September 2021 about the company’s statements on its recycling technology, financial projections, supply agreements, and management.3Resource Recycling. PureCycle Faces SEC Investigation
The $12 Million Securities Class Action
The first investor suit was filed on May 11, 2021, days after the Hindenburg report, in the U.S. District Court for the Middle District of Florida (Case No. 21-cv-00809), before Judge Paul G. Byron.4Kessler Topaz Meltzer & Check, LLP. PureCycle Technologies, Inc. Investigation Four individuals were named alongside the company: CEO Michael Otworth, CFO Michael Dee, Chief Commercial Officer David Brenner, and Byron Roth, the former chairman and CEO of SPAC entity ROCH and CEO of Roth Capital.5Robbins Geller Rudman & Dowd LLP. PureCycle Complaint
The class covered investors who bought PureCycle common stock, warrants, or options between November 16, 2020 and November 10, 2021.6ClaimDepot. PureCycle Technologies Securities Settlement Plaintiffs brought claims under Sections 10(b) and 20(a) of the Securities Exchange Act, alleging false and misleading statements across six public documents: two November 2020 press releases, an investor presentation, the S-4 registration statement, a February 2021 prospectus, and press releases from March and April 2021.7Simpson Thacher & Bartlett LLP. Erste Asset Management v. PureCycle
The complaint alleged that defendants described PureCycle’s recycling process as “proven,” “proprietary,” and “revolutionary” when it was not yet functional at commercial scale; projected EBITDA margins above 50% while concealing that the forecasts were speculative; touted management’s “broad experience” while hiding a track record of failed public companies; and understated competition for clean polypropylene feedstock.2Fenwick. Ciecko v. PureCycle Technologies, Inc.
In August 2022, Judge Byron granted the motions to dismiss in part. He found the complaint failed to meet the heightened pleading standard for securities fraud, calling it disorganized and overly reliant on block-quoting rather than tying specific misstatements to specific defendants. Some of the challenged statements were nonactionable puffery, the court said, while others involved verifiable factual claims that could support a fraud action if pled properly. The dismissal was without prejudice.7Simpson Thacher & Bartlett LLP. Erste Asset Management v. PureCycle
The case ultimately settled for $12 million. The claim-filing deadline was September 12, 2024, with Strategic Claims Services as administrator.8Strategic Claims Services. PureCycle Securities Settlement6ClaimDepot. PureCycle Technologies Securities Settlement4Kessler Topaz Meltzer & Check, LLP. PureCycle Technologies, Inc. Investigation
The Derivative Settlement and Governance Reforms
Shareholders also sued on behalf of the company itself, alleging that PureCycle’s officers and directors breached their fiduciary duties. The lead federal case, In re PureCycle Technologies, Inc. Derivative Litigation (No. 21-1569-RGA), was filed in the U.S. District Court for the District of Delaware, with the first complaint brought by shareholder Byung-Gook Han on November 3, 2021.3Resource Recycling. PureCycle Faces SEC Investigation A related action, Brunson v. Otworth (No. 2024-0326-NAC), was filed in the Delaware Court of Chancery in March 2024 after the board did not respond to a demand letter.9U.S. Securities and Exchange Commission. PureCycle Stipulation and Agreement of Settlement
On May 7, 2024, the parties reached a global settlement covering the federal derivative case, the Brunson Chancery action, and demand letters from two additional stockholders. PureCycle’s insurers agreed to pay $3 million to the company.10Kirby McInerney LLP. In Re PureCycle Technologies, Inc. Derivative Litigation The larger component was a set of governance reforms one settling firm valued at $33.8 million:11Kahn Swick & Foti, LLC. Melinda A. Nicholson – Attorney Profile
- Adding two new independent directors, expanding the board from seven to nine, with an emphasis on diverse candidates including women and underrepresented minorities.
- Separating the CEO and board chairman roles.
- Creating a Chief Compliance Officer position and an Operational Excellence Committee.
- Expanding the Audit and Finance Committee’s responsibilities, adopting a Disclosure Committee Charter, and requiring quarterly management reporting to the board.
- Maintaining a compensation clawback policy, implementing a whistleblower hotline, and hiring an independent governance consultant for annual reviews.
PureCycle agreed to maintain the reforms for at least five years.12PureCycle Technologies. Notice of Proposed Settlement of Stockholder Derivative Matters13Stock Titan. PureCycle Announces Preliminary Court Approval of Shareholder Derivative Settlement10Kirby McInerney LLP. In Re PureCycle Technologies, Inc. Derivative Litigation
The Dismissed New York Case
A separate securities class action was filed on September 29, 2023 in the U.S. District Court for the Southern District of New York before Judge John G. Koeltl. This one had nothing to do with the SPAC-era representations. It focused on PureCycle’s Ironton, Ohio purification plant, alleging the company failed to disclose a full plant power outage on August 7, 2023, the risk of further failures resulting from it, and that positive statements about the business consequently lacked a reasonable basis.14Stanford Law School Securities Class Action Clearinghouse. PureCycle Technologies, Inc. Securities Litigation
Defendants moved to dismiss in May 2024. On December 20, 2024, Judge Koeltl granted the motion with leave to amend. Plaintiffs did not file an amended complaint, and the court dismissed the case with prejudice on January 11, 2025.14Stanford Law School Securities Class Action Clearinghouse. PureCycle Technologies, Inc. Securities Litigation
Where PureCycle Stands Now
A central question through the litigation was whether PureCycle’s polypropylene recycling technology worked at commercial scale. Because both securities cases ended in settlement or dismissal rather than trial, no court reached a merits determination on that question.
Operationally, the Ironton plant has had a rocky path. It experienced mechanical problems throughout 2024, including an operational pause in April for improvements. By year-end 2024, PureCycle reported no sources of material revenue and a $289 million loss for the year.15Waste Dive. PureCycle Q4 Earnings: Ironton Processing, Resin Sales Setback
Production has since picked up. Ironton produced 7.2 million pounds of recycled resin in Q3 2025 and a record 7.5 million pounds in Q4.16PureCycle Technologies. PureCycle Technologies Reports Fourth Quarter Fiscal Year 2025 Results Revenue reached $2.7 million in Q4 2025, the company’s fourth consecutive quarter of sequential growth, with 11 customers including Procter & Gamble, whose product caps made from PureCycle resin are expected on shelves in early 2026.17PureCycle Technologies. PureCycle Technologies Third Quarter 2025 Corporate Update Those figures remain well short of the $800 million revenue projections that circulated during the SPAC era.