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Seller of golf company battles buyer over right to $16.6 million VAT receivables as tax credit

In late 2010, Seller decided to sell Target (a wholly-owned subsidiary engaged in the manufacture and distribution of golf products, including Titleist-brand golf clubs, balls and tees and Footjoy-brand golf shoes) by way of auction. The eventual winning bidder was

Posted in allocation of preclosing taxes refunds and credits, net working capital adjustment, stock purchase agreement, Taxation, value added tax or VAT

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

Buyer of business could not challenge net working capital purchase price adjustment after agreeing to final net working capital amount

This is a lesson about using net working capital purchase price adjustments.  In this case the buyer purchased the assets of a business from seller out of bankruptcy. The asset purchase agreement contained a net working capital purchase price adjustment. 

Posted in mutual mistake, net working capital adjustment, purchase price adjustment, reformation of contract

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