Monthly Archives: September 2019

Court Voided Board Approval of Book Value Stock Issuance to Director

Introduction The founder of a company often wants to pass the business on to his kids when he or she is ready to slow down. The founder also often wants to control the business after the transfer. That is what

Posted in doing deal with company's officer or director, fair insider deal Tagged with: , ,

Buyer and Seller Litigate Accountant Selection for Working Capital Calculation Dispute

Introduction The amount of the purchase price in a business acquisition is often finetuned in the purchase agreement by a working capital mechanism; where the working capital at closing is calculated after the closing. The deal That was the case

Posted in dispute resolution procedure, purchase price, working capital adjustment Tagged with:

Court Greenlights Business Asset Buyer’s Fraudulent Inducement Claim Re 2-Year Noncompete Term

Introduction Sometimes being a good guy in an M&A deal can come back to bite you. If the buyer’s allegations are true, then this feels like a no good deed goes unpunished story. The deal Here, both the buyer and

Posted in covenant not to compete, fraudulent inducement, noncompetition covenant term Tagged with:

Court Finds No De Facto Merger in Purchase of Bankrupt’s Intangibles-IP

Introduction Buyers of manufacturing businesses must always assess product liability risks. Even when buying the assets of the business as opposed to the stock (or LLC membership interests). The deal Here, the manufacturing company in this case made lathes. It

Posted in asset purchase agreement, de facto merger exception, successor liability Tagged with: , ,

Court Says Treadmill Maker Asset Buyer Assumed Implied Merchantability Warranty

Introduction One legal risk in buying a manufacturing business is product liability. Purchasing the assets as opposed to the equity of the manufacturer reduces that risk. However, in all states the buyer may be responsible for any product liability claims

Posted in assumed liabilities, implied warranty of merchantability, seller's warranty claims Tagged with:

7th Circuit Upholds 25% CERCLA Allocation to Innocent Business Buyer

Introduction Buying a business with CERCLA issues is fraught with risk. The buyer hopes that it can price the deal correctly; which includes an estimate of what if anything the buyer can recover from the actual polluter. The deal Here,

Posted in CERCLA or superfund liability, successor liability Tagged with:

9th Circuit Holds APA’s Delaware Forum Selection Clause Contravened Strong Idaho Public Policy

Introduction Many buyers and sellers in M&A transactions like Delaware courts to handle their disputes because of the reputation for competence. Thus, it is common to see a Delaware forum selection clause in M&A agreements. Some parties to a deal

Posted in contravene strong state public policy, forum non conveniens doctrine, forum selection clause Tagged with: , ,

Business Buyer’s APA Offset Rights Fund Its Environmental Legal Defense Costs

Introduction A buyer of a business likes offset rights. An offset right provision in a M&A purchase agreement gives the buyer the right to offset losses that it suffers that are the seller’s responsibility from post-closing payments that the buyer

Posted in environmental, indemnification, offset or setoff provision Tagged with: , , ,

Tolling of SPA Survival Period Didn’t Extend Delaware’s Statute of Limitations Period

Introduction It is common in M&A agreements to specify survival periods for making indemnification claims; and to toll the survival period while a timely indemnification claim is pending. However, although a survival period under Delaware law can shorten the applicable

Posted in extension by contract in Delaware, indemnification, statute of limitations, survival of reps and warranties, tolling Tagged with: , ,

Business Asset Buyer Wins Successor Liability Skirmish with Union

Introduction This is a continuing saga of a business asset buyer’s post-closing battle with a seller’s union. Chapter 1 is found in an earlier blog: http://www.mk-law.com/wpblog/court-says-asset-buyer-of-business-can-sue-seller-for-failure-to-disclose-its-union-contract-obligation/ The deal The seller and buyer both performed waterproofing, concrete and masonry restoration, and

Posted in actual knowledge, constructive knowledge, successor liability, union liabilities Tagged with: , , ,

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