Litigation developments: core M&A and corporate governance doctrines
Will COVID-19 Qualify as a ‘Material Adverse Effect’?
MAE Clauses: Troutman Sanders and Pepper Hamilton COVID-19 Litigation Podcast Series
Cases on Material Adverse Effect (“MAE”) clauses (also known as Material Adverse Change, or MAC, clauses) rarely come before the English courts, so there are limited English authorities on their construction. The High Court...more
As we begin 2025 and set our goals for the new year (realistic or unrealistic), we outline some of the significant English court rulings from 2024 and the key lessons they offer for the year ahead. In 2024, the courts...more
The English High Court has held that a geotechnical event ("GE") at a mine in Brazil did not engage the material adverse effect ("MAE") clause in an SPA, pursuant to which two mines in Brazil were being sold for $1.2...more
Over the past 15+ years covered by the ABA studies, materiality scrapes have morphed from being a somewhat uncommon provision, seen in about 14% of transactions in 2005, to something near-ubiquitous in M&A purchase...more
Chancery Court Provides Additional Guidance on Disclosure Requirements for Corwin Analysis - One of the most significant decisions of the Delaware Chancery Court in the last 15 years was the court’s ruling in Corwin v....more
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
On March 1, 2022, the Delaware Court of Chancery delivered a memorandum opinion ordering a yoga franchisor to complete the acquisition of its franchisee’s chain of yoga studios. The case arose out of the parties’ pre-COVID...more
The COVID-19 pandemic created many uncertainties and challenges for investors and operators alike across the Middle East, including in the United Arab Emirates, which is often considered a regional healthcare and business...more
Bardy Diagnostics: Chancery confirms high bar for material adverse effect - The Delaware Court of Chancery was once again required to determine whether a potential buyer should be relieved of its obligation to acquire a...more
The Premier League was awarded over USD 200m by way of summary judgment against PPLive in its case about football broadcasting rights during the pandemic. ...more
The American Bar Association (ABA) 2020 – 2021 Private Target Mergers & Acquisitions Deal Points Study[1] analyzed publicly available acquisition agreements for 123 transactions executed and/or completed in 2020 and the first...more
In a highly anticipated decision, the Ontario Superior Court of Justice – Commercial List held that Cineworld wrongly terminated its arrangement agreement to acquire Cineplex, which was awarded substantial damages....more
Recent Delaware cases appear to make two things clear. First, it remains extremely unlikely that a court will find an event or occurrence to fall within the general provisions of a Material Adverse Effect condition and as a...more
Prior to the Delaware Court of Chancery’s opinion in Akorn, Inc. v. Fresenius Kabi AG, C.A. No. 2018-0300-JTL, 2018 WL 4719347 (Del. Ch. Oct. 1, 2018), aff’d 198 A.3d 724 (Del. 2018), no Delaware court had found the existence...more
With the COVID-19 pandemic continuing to adversely impact businesses across the globe, for the past year lenders have been reviewing their portfolios for credit degradation. Credit agreements will often contain a clause in...more
In AB Stable VIII LLC v. Maps Hotel and Resorts One LLC et al., the Delaware Court of Chancery has published its first ruling regarding whether or not the effects of the COVID-19 pandemic constitute a material adverse effect...more
Below is our Quarterly Corporate / M&A Decisions Update for decisions in Q4 2020. This update is designed to highlight selected important M&A, corporate, and commercial court decisions on a quarterly basis. Brief summaries of...more
In the recent case of Travelport Ltd v Wex Inc [2020] EWHC 2670 (Comm) (the “Travelport Case”), the High Courts of England considered the construction of a material adverse effect clause (“MAE Clause”) in which a party sought...more
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
The decision leaves the door open for buyers to argue that inflexible ordinary course covenants can provide a basis to terminate a transaction in which a seller does not suffer an MAE. Key Points: ..The Delaware Court...more
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
A Material Adverse Effect clause in an SPA excluded conditions resulting from a pandemic except where those conditions would have a disproportionate effect on the target companies as compared to companies in the “industries”...more
In just about every way, the world turned upside down in 2020. Deals were no exception. Whether it was incorporating a PPP payoff or forgiveness into deal terms, drafting MAE, interim operating covenants and working capital...more
Market Trends: What You Need to Know - Over the past almost 15 years covered by the ABA studies, materiality scrapes have morphed from being a somewhat uncommon provision, seen in about 14% of transactions in 2005, to...more
In a dispute between WEX (Inc.) (“WEX”) and the shareholders (the “Sellers”) of eNett International (Jersey) Limited (“eNett”) and Optal Limited (“Optal”), following an expedited trial on a number of preliminary issues, the...more