Monthly Archives: May 2020

No Fraud for Positive Projections Proved Inaccurate in Hindsight

May 31, 2020 Introduction It is all too common for an acquired business to not perform as well as expected after the closing. But the fact that the target’s projections were inaccurate do not amount to a fraud claim. The

Posted in constructive fraud, federal securities fraud, fraud in business sale Tagged with: , ,

Creditor’s Post 363 Successor Liability Claim Thrown Out by Bankruptcy Court

May 27, 2020 Introduction There is more legal risk when buying a distressed business, especially the risk of post-closing claims against the buyer by seller’s creditors, under a successor liability theory. This risk can be substantially minimized if the buyer

Posted in successor liability Tagged with: ,

US Court Enforces SPA’s Purchase Price Adjustment Dispute Forum Selection Clause

May 24, 2020 Introduction Many business acquisitions have post-closing purchase price adjustments based upon the financial position of the target company at closing. The parties usually provide for a dispute resolution procedure for resolving disagreements over the final numbers, and

Posted in arbitration vs expert determination, dispute resolution provision, forum selection clause, purchase price adjustment Tagged with: ,

Owner Loses $14.5 Million Fraud Claim Against Majority Shareholder in Stock Deal

May 22, 2020 Introduction This deal is a reminder that a seller of a business needs to read the transactional documents (with the help of a competent lawyer) before signing. In this case it cost the seller $14.5 million. The

Posted in fraud in business sale, fraudulent inducement, shareholder release Tagged with: , ,

Buyer in All Cash Stock Deal Fights Mere Continuation Successor Liability Claim

May 15, 2020 Introduction A buyer of the stock of an unrelated company for cash usually does not worry about being directly liable for the target’s liabilities. Perhaps that is not the case when purchasing the stock a distressed business.

Posted in mere continuation exception, stock purchase agreement, successor liability Tagged with: , ,

No CGL Coverage for $25 Million Fire Damage Claim to Business Assets Sold to Buyer

May 8, 2020 Introduction A seller of a business often is allocated legal risks of the sold business. This is accomplished through comprehensive purchase agreement representations and warranties and indemnification provisions.  Such legal risks can turn out to be very

Posted in CGL Policy, Duty to Defend Tagged with: , ,

Business Asset Buyer Assumed Seller Contract by its Post-Closing Conduct

May 2, 2020 Introduction Buyers like to buy the assets of a business (as opposed to the company that runs the business) because it can pick and choose which seller contracts it wants to assume. Generally, a buyer would pick

Posted in asset seller's liabilities, implied assumption of seller contract/liability Tagged with: ,

Bankruptcy Court Approves 363 Sale of Business to Buyer Connected to Seller Insiders

May 1, 2020 Introduction A buyer of a distressed business often prefers to accomplish the transaction through the bankruptcy courts under a Bankruptcy Code Section 363 acquisition. One reason for this is that the buyer can generally purchase the assets

Posted in buyer connected to seller insiders, distressed business acquisitions, Section 363 sale Tagged with: ,

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