Overview

A class action lawsuit has been filed against BigBear.ai Holdings, Inc. (“BigBear” or the “Company”) and certain of the Company’s current and former senior executive officers alleging violations of the federal securities laws.  The Company’s common stock trades in an efficient market on the NYSE under the ticker symbol “BBAI.”

The BigBear class action lawsuit was brought on behalf of all persons and entities who purchased or otherwise acquired BigBear securities between March 31, 2022, and March 25, 2025, both dates inclusive (the “Class Period”).

BigBear is an artificial intelligence (“AI”)-driven technology solutions company.  The Company purportedly offers national security, supply chain management, and digital identity and biometrics solutions.  In June 2021, BigBear.ai Holdings entered into a merger agreement (the “Merger Agreement”) with GigCapital4, Inc. (“GigCapital4”), a special purpose acquisition company (“SPAC”), GigCapital4 Merger Sub Corporation (“Merger Sub”), and BBAI Ultimate Holdings.  Pursuant to the Merger Agreement, Merger Sub first merged with and into BigBear.ai Holdings, with BigBear.ai Holdings being the surviving entity in the merger (the “First Merger”).  Then, immediately following the First Merger, BigBear.ai Holdings merged with and into GigCapital4, with GigCapital4 being the surviving entity in the merger (the “Second Merger,” and together with the First Merger, the “Mergers,” and together with the other transactions contemplated by the Merger Agreement, the “Business Combination”).  On December 7, 2021, the Mergers were consummated and GigCapital4, Inc. was renamed as BigBear.ai Holdings, Inc.

Upon completion of the Business Combination, BigBear issued $200 million of unsecured convertible notes – debt instruments that can be converted into equity at a future date – due to mature on December 15, 2026 (the “2026 Convertible Notes” or “2026 Notes”).  The 2026 Convertible Notes bear interest at a rate of 6.0% per annum, payable semi-annually, and not including any interest payments that are settled with the issuance of shares and were convertible into 17,391,304 shares of the Company’s common stock at an initial Conversion Price of $11.50.  Convertible notes are often classified as long-term debt and as such, consistent with generally accepted accounting principles (“GAAP”), they must be accounted for in a company’s quarterly and annual reports as liabilities until they reach maturity, at which point they either convert to equity or are repaid as principal and interest.

BigBear uses the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) – the single source of U.S. GAAP – to account for all transactions and events in which it obtains control over one or more other businesses (even if less than 100% ownership is acquired), to recognize the fair value of all assets and liabilities assumed and to establish the acquisition date fair value as of the measurement date.  Accordingly, because the Business Combination qualified as such a transaction, BigBear was required to account for it, and its issuance of the 2026 Convertible Notes therewith, in accordance with the ASC.

Under ASC 815-15, an entity is required to bifurcate and separately account for a feature or derivative embedded within a host contract (such as the conversion option within the 2026 Convertible Notes) if: (1) the economic characteristics and risks of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; (2) the hybrid instrument is not remeasured at fair value under otherwise applicable GAAP with changes in fair value reported in earnings as they occur; and (3) a separate freestanding instrument with the same terms as the embedded derivative would meet the definition of a derivative and would not qualify for a “derivative scope exception.”  An embedded derivative may qualify for a scope exception if, for example, it meets the requirements of ASC 815-40, which covers contracts issued or held by an entity that are both indexed to its own stock and classified in stockholders’ equity in its statement of financial position.  If an embedded feature qualifies for a derivative scope exception, the entity does not separate it from the host contract and the entity accounts for the entire instrument (assuming no other embedded features require bifurcation) in accordance with other U.S. GAAP.  Therefore, whether BigBear was required to bifurcate the conversion option within the 2026 Convertible Notes as a derivative was dependent, in part, upon the conversion option’s qualification for a derivative scope exception.

The BigBear class action lawsuit alleges that Defendants, throughout the Class Period, made materially false and misleading statements regarding the Company’s business, operations, and compliance policies.  Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) BigBear maintained deficient accounting review policies related to the reporting and disclosure of certain non-routine, unusual, or complex transactions; (2) as a result, the Company incorrectly determined that the conversion option within the 2026 Convertible Notes qualified for the derivative scope exception under ASC 815-40 and failed to bifurcate the conversion option as required by ASC 815-15; (3) accordingly, BigBear had improperly accounted for the 2026 Convertible Notes; (4) the foregoing error caused BigBear to misstate various items in several of the Company’s previously issued financial statements; (5) as a result, these financial statements were inaccurate and would likely need to be restated; (6) BigBear would require extra time and expense to correct the inaccurate financial statements, thereby increasing the risk that the Company would be unable to timely file certain financial reports with the U.S. Securities Exchange Commission; and (7) as a result, the Company’s public statements were materially false and misleading at all relevant times.

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If you purchased or otherwise acquired BigBear securities between March 31, 2022, and March 25, 2025, both dates inclusive, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page. 

You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at investors@dicellolevitt.com. 

The deadline to apply to the Court to serve as lead plaintiff in the BigBear class action lawsuit is June 10, 2025.