On August 13, 2020, the Supreme Court of Canada (the SCC) dismissed the application for leave to appeal in the case of Carlock v ExxonMobil Canada Holdings ULC (Carlock), indicating that the negotiated deal price in a transaction between well-informed, sophisticated, arms-length parties that is the result of a vigorous sale process provides strong objective evidence of fair value in appraisal proceedings before Canadian courts. This aligns with the recent U.S. decision in DFC Global Corp. v Muirfield Value Partners, LP, where the Delaware Supreme Court strongly endorsed deal price as often “the best evidence of … Continue Reading
A significant consideration when considering an M&A target can be the impact that pending or threatened litigation has on the proposed transaction.
While some organizations may balk at the idea of acquiring a target that is (or is likely to be) the subject of a lawsuit, such companies are often available at significant discounts to purchasers that are able to understand and address the risks.
Each transaction will have its own unique considerations. However, an organization that is contemplating acquiring a target that is the subject of pending or threatened litigation should, among other items, address the following high-level considerations:… Continue Reading
In a recent unanimous decision of the full bench in 1068754 Alberta Ltd v Quebec (Agence du revenue) (1068754 Alberta Ltd.), the Supreme Court of Canada has upheld Quebec tax officials’ authority to demand information from a national bank that operates in multiple provinces including Quebec and Alberta, thereby asserting that different branches of the same corporation are still one legal person.
Unlike other provinces, Quebec collects its own income tax and the requirement to pay taxes depends on the residency of a person (legal or natural). Determining residency can be a complex legal analysis and requires a … Continue Reading
What happens when a key asset of a target corporation is a cause of action? Can it be assigned to the purchaser in an asset purchase or to a “Newco” in a corporate restructuring?
It is a longstanding common law principle that a bare right of action in tort is not assignable. This is because it is considered to be tainted by “maintenance” or “champerty”. “Maintenance” occurs when a third party who does not otherwise have an interest in the litigation provides financial or other assistance to one of the parties to the litigation. “Champerty” involves a third party engaging … Continue Reading
In 2014, the Supreme Court of Canada delivered a seminal decision, Bhasin v Hrynew (Bhasin), on common law duties of contractual performance. Earlier discussions on the case can be found here and here. In the Bhasin decision, the Court established a general obligation of good faith in the performance of contracts, and a duty of “honest performance”, which applies to all contracts and requires parties to act honestly with one another in relation to the performance of their contractual obligations.
What is it?
Increasingly, shareholders are filing lawsuits to challenge M&A transactions. The litigation often takes the form of a class action, with plaintiff’s counsel alleging a breach of fiduciary duty on the part of the target’s board of directors resulting in a failure to maximize shareholder value. The specifics of the complaint are typically related to the process followed, the price agreed to, or insufficiency of disclosure.… Continue Reading