News & Analysis as of

Ordinary Course of Business Defense

Holland & Knight LLP

Beware: Liberty Global Appeal Puts Basic Tax Planning in Jeopardy

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The Liberty Global Inc. v. United States appeal has practitioners and taxpayers concerned that the economic substance doctrine will be applied to disallow the tax benefits of ordinary course of business decisions and disrupt...more

Allen Matkins

Nevada Supreme Court Holds That Temporary Closing During Pandemic Did Not Violation Of This "Ordinary Course" Covenant

Allen Matkins on

Merger and acquisition agreements almost invariably include a promise by the seller to continue to operate the business in the "ordinary course".    This promise is typically included to provide assurance to the buyer that...more

Ward and Smith, P.A.

Fireworks, Hot Dogs, and Bankruptcy?

Ward and Smith, P.A. on

As the townsfolk of Lubbock, Texas readied for the annual Fourth on Broadway Independence Day fireworks show and celebration, local car dealer Reagor-Dykes wanted to be front of mind.  So as it had the previous year, it...more

Farrell Fritz, P.C.

Inside the Merger Agreement between Elon Musk and Twitter

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In what seems like one of the speediest transaction processes ever for a deal of its size, Twitter agreed on April 25, 2022 to be acquired by Elon Musk for $54.20 per share or about $44 billion.  It all started with Musk...more

Nelson Mullins Riley & Scarborough LLP

Reviewing Late Payments for an Ordinary Course Defense

You have a contract with Company Slow Pay/No Pay.  You provide Company Slow Pay/No Pay with goods, and Company Slow Pay/No Pay pays you for those goods.  Over the past year, you notice that Company Slow Pay/No Pay has become...more

Freeman Law

Faulkner v. Broadway Festivals, Inc., Adv. Proc. 20-05031 (Bankr. N.D. – Tex., January 11, 2022)

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Faulkner v. Broadway Festivals, Inc. The recent bankruptcy case for Northern District of Texas, Faulkner v. Broadway Festivals, Inc., Adv. Proc. 20-05031 (Bankr. N.D. – Tex., January 11, 2022), addresses preferential...more

Hogan Lovells

AB Stable v. MAPS Hotels: Pandemic changes to hotel operations breach ordinary course covenant - Quarterly Corporate / M&A...

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In AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC, et al., No. 71, 2021 (Del. Dec. 8, 2021), the Delaware Supreme Court, sitting en banc, affirmed a Court of Chancery judgment finding that a hotel owner violated its...more

Patterson Belknap Webb & Tyler LLP

Fireworks in the Sky but not in Court: Bankruptcy Judge Takes a Practical Approach to the Ordinary Course of Business Defense

A recent decision applied the ordinary course of business defense to a preferential transfer claim where the parties had engaged in only two transactions. In re Reagor Dykes Motors, LP, Case No. 18-50214, Adv. No. 20-05031,...more

Farrell Fritz, P.C.

Course Correction: Why “Ordinary Course” Covenants in Acquisition Agreements Should be Drafted Carefully

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Should a buyer be allowed to walk away from an acquisition if an extraordinary event occurs between signing and closing that forces the target company to take emergency remedial measures outside its ordinary course, even if...more

A&O Shearman

M&A Watch: 'Ordinary Course of Business’ During Not-So-Ordinary Times

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On December 8, 2021, the Delaware Supreme Court upheld the Delaware Court of Chancery’s decision that Mirae Asset Financial Group (“Mirae”) was excused from closing a $5.8 billion acquisition of luxury hotels because the...more

Ballard Spahr LLP

Hotel Group Seller’s COVID-19 Response Breaches ‘Ordinary Course’ Covenant, Excusing Buyer’s Performance

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Delaware’s Supreme Court held this month that a buyer’s obligation to close a hotel group purchase was excused where the seller adopted what it described as “proportional changes in response to extraordinary...more

Lowenstein Sandler LLP

Preference Defense In the Wake Of The Pandemic: A Primer

Nothing is more frustrating to a trade creditor holding a large unpaid balance owed by a debtor in bankruptcy than the risk that payments the trade creditor received before the debtor filed bankruptcy may be clawed back by...more

Pillsbury Winthrop Shaw Pittman LLP

Snow Phipps: No MAE or Ordinary Course Breach Related to COVID-19

Delaware Chancery Court awards specific performance after finding that buyer failed to demonstrate a material adverse effect or ordinary course breach by target and that buyer failed to use reasonable best efforts to obtain...more

Farrell Fritz, P.C.

Seller Beware: “Ordinary Course” and “Material Adverse Effect/Change” in the Age of COVID-19

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In late November of last year, the Court of Chancery in Delaware handed down a decision in a case called AB Stable VIII LLC v. MAPS Hotels and Resorts One, LLC ...more

Goodwin

Buyer (or Seller) Beware: Who Bears the Risk with Hotel Operating Covenants in a Pandemic?

Goodwin on

Following a dramatic pause starting last spring, the hotel purchase and sale market has begun to show signs of a rebound. A significant challenge to these sales, however, is the remaining uncertainty around the COVID-19...more

Akin Gump Strauss Hauer & Feld LLP

Delaware Court of Chancery Issues Precedential Decision Addressing the Impact of COVID-19 on M&A Transaction, Finding Violation of...

In AB Stable VIII LLC v. Maps Hotels and Resorts One LLC, the Delaware Court of Chancery issued a precedential decision addressing whether a buyer could walk away from an M&A transaction because the target company’s responses...more

Dorsey & Whitney LLP

Chancery Opinion Provides First Delaware Court Guidance on COVID-19’s Impact on MAE Provisions and Ordinary Court Course Covenants

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On November 30, 2020, Vice Chancellor Laster of Delaware’s Court of Chancery issued the first case where the pandemic provided a company with the ability to walk away from its contractual obligations in a sale transaction,...more

Troutman Pepper

Changes to Target’s Business Prompted by COVID-19 Pandemic Breached Ordinary Course Covenant, Permitting Buyer to Escape Deal

Troutman Pepper on

In a recent decision, the Delaware Court of Chancery permitted a buyer to escape its obligation to acquire a target from a seller under the parties’ purchase agreement because the target had made extensive changes to its...more

Dechert LLP

The UK Supreme Court Rules on Vicarious Liability for Acts of Employees

Dechert LLP on

In WM Morrisons Supermarkets plc v Various Claimants the Supreme Court today issued an important judgment clarifying the scope of vicarious liability of employers for the wrongful acts of their employees: Morrisons was found...more

Lowenstein Sandler LLP

Preference Defense Primer Update: Diligence Can Pay Off!

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Nothing is more frustrating to a trade creditor saddled with a large unpaid balance owed by a debtor in bankruptcy than being subject to the risk of having to remit back to the debtor’s estate “preference” payments received...more

Obermayer Rebmann Maxwell & Hippel LLP

Sweet Defense: The Eleventh Circuit Rules Ice Cream Maker's New Value Not Need to Remain Unpaid to be Valid Preference Defense

The Eleventh Circuit in Kaye v. Blue Bell Creameries, Inc. (In re BFW Liquidation, LLC) recently joined the majority of those Circuits Courts having ruled on the issue that subsequent new value does not need to remain unpaid...more

White & Case LLP

The Angel Bell post-judgment – the exception and not the rule?

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In a decision handed down last week, Michael Wilson & Partners Ltd v John Forster Emmott [2019] EWCA Civ 219, the Court of Appeal has reviewed the authorities relating to removing, following judgment, the so-called Angel Bell...more

Jones Day

Eleventh Circuit Expands "Subsequent New Value" Preference Defense to Cases Involving Paid-For New Value

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In Kaye v. Blue Bell Creameries, Inc. (In re BFW Liquidation, LLC), 899 F.3d 1178 (11th Cir. 2018), the U.S. Court of Appeals for the Eleventh Circuit broadened the scope of section 547(c)(4) of the Bankruptcy Code’s...more

Fenwick & West LLP

Akorn v. Fresenius: Important Practical Lessons from First-Ever Material Adverse Effect

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On October 1, in Akorn v. Fresenius Kabi, the Delaware Court of Chancery for the first time found that a material adverse effect — or MAE — had occurred in a merger transaction, which, combined with other breaches of the...more

Kramer Levin Naftalis & Frankel LLP

Eleventh Circuit Narrows Circuit Split Holding New Value Not Required to Remain Unpaid

The Eleventh Circuit, in In re BFW Liquidation, LLC., Case No. 17-13588, 2018 WL 3850101 (11th Cir. Aug. 14, 2018), reversed the Bankruptcy Court’s decision on direct appeal, holding that the new value defense to preferences...more

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