“Busted Deal” Litigation
Between the signing of an M&A transaction and the receipt of regulatory and/or shareholder approvals required to close, one of the parties may seek to back out of the deal. The resulting “busted deal” litigation typically involves one company’s effort to obtain specific performance of the transaction agreement and/or to obtain damages, and the other company’s efforts to avoid the transaction, such as by arguing that the other party to the agreement has suffered a “material adverse effect” as defined in the transaction agreement.
In recent years there have been a flurry of “busted deal” cases, as corporations sought to avoid agreements signed in better economic times. Seitz Ross has been actively involved in many of the most significant busted deal cases of that period.