/CNW Telbec/ - Fairstone Financial Inc. ("Fairstone"), Canada s leading provider of responsible lending solutions for near-prime borrowers, celebrated.
COVID And The Courts: The Year In Review - Real Estate and Construction mondaq.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from mondaq.com Daily Mail and Mail on Sunday newspapers.
COVID-19’s Impact on M&A Transactions and Material Adverse Effect Clauses
The COVID-19 pandemic has given rise to many M&A-related disputes. By some estimates, over 3,000 commercial cases were filed in U.S. federal courts alone as a result of the COVID-19 crisis. This figure does not account for numerous COVID-related disputes that were filed in U.S. state courts. Given that many transactions involving Latin American parties incorporate New York law or are based on provisions developed under New York law, these decisions may be of particular interest to companies doing business in Latin America.
In a number of the cases, the dispute turns on a provision common to M&A transactions, namely the material adverse event or effect (MAE) clause (sometimes referred to as the material adverse change (MAC) clause). An MAE/MAC clause, subject to its specific terms, may excuse a buyer from its obligation to close where the seller experiences a significant change in condition after signing and
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This is part five of a series focusing on current M&A
trends, opportunities and challenges.
With positive news with respect to vaccines, there are reasons
for optimism that the worst of the COVID-19 pandemic and the
corresponding governmental health restrictions may ease in
2021. However, it also seems increasingly clear that this
easing is still months away, and that pandemics and other
unforeseen crises are a reality that businesses will need to
address on an on-going basis in the future, including in the
context of M&A transactions.
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Stikeman Elliott represented the sellers of Fairstone
Financial in the first case in which a Canadian court has ordered
specific performance of a major M&A deal and the first Canadian
case to consider the impact of COVID-19 on an
acquisition.
The COVID-19 pandemic has led to a notable increase in actual
and contemplated M&A litigation, as buyers under acquisition
agreements signed before the pandemic consider their obligations to
close and sellers seek to compel performance. At issue in these
cases are two key contractual risk allocation mechanisms widely