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To embed, copy and paste the code into your website or blog: The global outbreak of COVID-19 hit the United States in March 2020. Over a year later, it has irrevocably altered the way that M&A parties negotiate and structure agreements for the purchase and sale of private companies. In the wake of the pandemic, parties to privately negotiated M&A agreements have begun adding provisions or modifying existing ones to account for the many challenges COVID-19 has presented. For example, since March...

Highlights Applying New York law, the U.S. District Court for the Southern District of New York rules that a party can invoke a contractual force majeure provision to terminate a contract on the ground that the COVID-19 pandemic and resulting government-imposed restrictions on business operations fit within the meaning of a "natural disaster." The courts ruling joins the growing list of jurisdictions that have interpreted "natural disaster" to extend beyond weather-related and environmental di...

To embed, copy and paste the code into your website or blog: The Delaware Court of Chancery’s docket exploded with expedited “broken” deal litigation in 2020, driven by the impact of COVID-19. Beyond pandemic-related merger litigation, stockholder plaintiffs remained focused on claims involving controlling stockholders and increased focus on claims against officers for breaches of the duty of care. There were also significant developments in connection with stockholder statutory books-and...

In its recent decision in Fairstone Financial Holdings Inc. v. Duo Bank of Canada(Fairstone), the Ontario Superior Court of Justice (Commercial List) (Court) addressed the interpretation of material adverse effect (MAE) clauses and ordinary course covenants in M&A transactions. Such provisions are of renewed interest to many prospective buyers, sellers and target companies in view of the ongoing effects of COVID-19. KEY TAKEAWAYS Interpretation of MAE provisions Burden of proof and constituent...

In its recent decision in Fairstone Financial Holdings Inc. v. Duo Bank of Canada (Fairstone), the Ontario Superior Court of Justice (Commercial List) (Court) addressed the interpretation of material adverse effect (MAE) clauses and ordinary course covenants in M&A transactions. Such provisions are of renewed interest to many prospective buyers, sellers and target companies in view of the ongoing effects of COVID-19. KEY TAKEAWAYS Interpretation of MAE provisions Burden of proof and constituen...

Key Points 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 to the COVID-19 pandemic constituted either (1) a “material adverse effect” (MAE) or (2) a breach of the covenant to operate in the ordinary course of business between signing and closing (“Ordinary Course Covenant”). Although the MAE definition did n...