Page 8 - Ordinary Course News Today : Breaking News, Live Updates & Top Stories | Vimarsana

To print this article, all you need is to be registered or login on Mondaq.com. The economic dislocation caused by the COVID-19 pandemic has led to an uptick in "busted deal" litigation in M&A transactions in the United States and Canada. 1 The crux of the litigation is whether the buyer may abandon the transaction without penalty on the basis of allegations that the pandemic has had a material adverse effect (MAE) on the target business and/or that operational responses to the pandemic constitute a breach of a covenant requiring the target business to operate in the o...

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 not include an exception for the effects arising from a “pandemic” or “epidemic,” the court f...

To embed, copy and paste the code into your website or blog: 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, analyzing both the material adverse effect (“MAE”) provisions and ordinary course covenants. AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC et al., C.A. No. 2020-0310-JTL (Del. Ch. Nov. 30, 2020). The AB Stable case involved the attempted sale by AB Stable VIII LLC (the “Seller”) of 15 hotels to...