Monthly Archives: November 2018

Stock sellers lose opening legal battle over buyer’s environmental claim

In November 2007, Sellers of Target agreed to sell Target to Buyer through a stock purchase agreement. When the sale closed in December 2007, Sellers placed $16.7 million into escrow to secure any post-closing claims that Buyer might assert. Target’s

Posted in environment representations and warranties, escrow, indemnification, representations and warranties

Stock buyer covered as successor to seller under target D&O policy

On November 3, 2015, Buyer entered into a stock purchase agreement pursuant to which Buyer became the 100% shareholder of Target. After the sale closed, Buyer sent demand letters to Management Sellers, former Target Directors, seeking indemnification for financial misconduct

Posted in ambiguous exclusion, directors and officers insurance policy, insurance coverage, major shareholders exclusion, stock purchase agreement Tagged with:

Court said it may be reasonable for business buyer to rely on seller oral representation about competition

Target, based out of the Kansas City area, provides movie theater digital marketing/advertising and movie theater concessions. Sellers were the owners of Target. Buyer is a Texas capital investment limited liability company. In early 2015, Sellers circulated a solicitation seeking

Posted in anti-reliance clause, due diligence, extra-contractual fraud, negligent misrepresentation, reliance

Stock buyer of target and stock seller in post-closing fight over target’s cash

Sellers incorporated Target in 1994 and owned all the shares of Target. Target’s assets consisted of two buildings in Old San Juan, Puerto Rico and two bank accounts at UBS. Through Target, Sellers rented the buildings—a commercial space and six

Posted in book value adjustment, cash and cash equivalents, Description of business assets purchased, net working capital adjustment, purchase price adjustment, stock purchase agreement

Employer breach of employment agreement results in no enforcement of employee non-compete

Employee began his career in physical therapy in 1994. He worked as an independent contractor until joining Target as an employee in 2008 to manage a number of physical therapy clinics in southern Delaware. In 2008, Employee and Target executed the

Posted in covenant not to compete, employment agreement, stock purchase agreement

Allegations were enough, if true to establish that business sellers breached their noncompetition, nonsolicitation and confidentiality covenants

Buyer is a full-service specialty contract manufacturer of automotive, household, insecticide, and pesticide aerosols, based in St. Clair, Missouri, about 50 miles southwest of St Louis. Target is a specialty chemical contract packager, which manufactures aerosols, liquids, and bag-on-valve products,

Posted in covenant not to compete, hiring seller's employees, no kickback or bribe rep, nondisclosure agreement, trade secret misappropriation

Buyer of construction company obtains judgment against stock seller for target’s pre-closing noncompliance with minority business participation program

Seller and another shareholder, each owned 50% of Target, a large heavy construction company based in the New York City area. Buyer, a Spanish group of companies, purchased all of Target stock from the two shareholders pursuant to a stock

Posted in due diligence, minority business participation program, no pending government investigations or inquiries, representations and warranties, stock purchase agreement

Signing closing documents before closing acquisition results in costly litigation

In 2016, the parties negotiated a stock purchase agreement by which Seller would sell Target, a car dealership, to Buyers and another colleague in two phases. First, Buyers and their colleague were to purchase 21% of Target for $500,000 cash.

Posted in breach of contract, closing, damages, specific performance, stock purchase agreement

Court finds that buyer of a California union skilled nursing facility had no constructive knowledge of seller’s multi-employer pension plan withdrawal liability

This is a follow up to a discussion of an earlier June court decision involving the same business buyer. http://www.mk-law.com/wpblog/buyer-of-a-california-union-skilled-nursing-facility-faces-multi-employer-pension-plan-withdrawal-liability-if-buyer-had-constructive-knowledge-of-the-potential-liability/ Buyer purchased a 99-bed skilled nursing facility located Santa Clarita, California from Seller through an asset purchase agreement that closed

Posted in asset seller's liabilities, constructive knowledge, due diligence, federal multiemployer pension plan withdrawal liability, multi-employer pension plan, post asset purchase issues, successor liability, union liabilities

Delaware Court says that alleged material breach of stock purchase agreement by seller of target company does not excuse buyer from making post-closing payments to seller

On August 31, 2016, Buyer and Sellers entered into a stock purchase agreement in which Buyer agreed to purchase all of Sellers’ shares of Target stock for $93.5 million, subject to certain post-closing adjustments. The transaction closed on October 3, 2016.

Posted in escrow, offset or setoff provision, stock purchase agreement

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