Monthly Archives: July 2018

Delaware court holds that owner of a buyer of business assets cannot escape liability for fraudulent statements made outside of the asset purchase agreement

The buyer wanted to acquire the seller’s business. The seller was interested in selling its assets to the buyer but was worried about the buyer’s ability to finance the purchase price; especially since a large portion of the purchase price

Posted in fraud in business sale, integration clause

Buyer can’t prevent the seller of a tax, accounting, and financial practice, from soliciting his old clients after expiration of noncompetition covenant term

On October 16, 2007, the seller sold his tax preparation, accounting, and financial management practice, including his client list, trade name, and an office lease in Hicksville (Long Island, New York) to the buyer. The purchase agreement provided that the

Posted in covenant not to compete

Buyer of internal audit and consulting firm gets burned by tax benefit sharing and liquidated damages provisions

In August 2013, the buyer acquired the global internal audit and consulting subsidiary of the seller, pursuant to a stock purchase agreement. The agreement required the buyer to pay seller 50% of certain tax benefits that the buyer will receive

Posted in liquidated damages provision, tax benefit sharing

Court holds that seller in failed information-technology business deal cannot sue buyer’s lender for breach of loan commitment

This case arose from the unsuccessful sale of a Houston-area information-technology company which will be referred to as the target. The target’s seller agreed to sell his target stock to another Houston-area information-technology company, which will be referred to as the

Posted in financing acquisition issues, third party beneficiary clause

Court enforces a noncompetition covenant given by owner of the seller of a paper products and janitorial supply business

This is the story of a court ordering the owner of a seller of a business to comply with the noncompetition covenant given by the owner to the buyer. Non-relevant facts have been simplified to illustrate the lesson of this

Posted in covenant not to compete

Court says that the buyer of the assets of two restaurants can sue the seller for damages for inflating sales revenue

This is the story of a buyer of the assets of two restaurants who finds post-closing sales are 60% of the restaurants historic performance as shown on the financial statements provided to the buyer by the seller. Non-relevant facts have

Posted in due diligence, fraud in business sale

Court holds that an asset buyer of an alarm business was not bound by a federal injunction applying to seller because the buyer had no notice of the injunction before the closing

In 2012, ADT (the largest security company in the United States and Canada) filed a complaint against the seller that alleged violations of the federal trademark laws. ADT claimed that the seller made false statements to customers of ADT to

Posted in post asset purchase issues, seller's federal injunctions

Court permits business asset buyer’s product liability carrier to sue the seller for indemnification

This lawsuit stems from a dispute over an April 9, 2012 asset purchase agreement between the buyer and seller. Pursuant to the agreement, the buyer purchased a set of assets from the seller, including the design of the seller’s exercise equipment. The

Posted in asset seller's liabilities, compliance with all applicable laws, excluded liabilities, representations and warranties

Court holds that the buyer of the assets of a business assumed seller’s loan obligation to a creditor of a division the buyer did not purchase

The seller produced washer products. A medical device manufacturing company wanted the seller to make it an ultrasonic medical device washer product. The seller did not have the money to produce it. So, the customer, which we will call the

Posted in buyer's assumption of seller liabilities in asset acquisition

Court allows business asset buyer to sue seller’s employee-owner for using trade secrets buyer purchased from seller to compete against the buyer

In this case, the buyer is a security system installation, servicing, and monitoring company with residential and commercial customers.  In November of 2016 it purchased the assets of the seller which was in the business of providing central station monitoring

Posted in post asset purchase issues, trade secret misappropriation by former seller employee

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