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
As we reported in 2014, United States post-deal litigation became more of a rule than an exception in the early-to-mid 2010s, with over 95% of M&A transactions attracting litigation. In many cases, a single deal could result in multiple suits distributed across state jurisdictions. The majority of these actions were “disclosure-only”, aimed at prompting the target company to make additional disclosure (and generally resulting in large fees for plaintiffs’ counsel) and drew a great deal of criticism from lawmakers and jurists. However, changes may be on their way, led by the state of Delaware.
In the last … 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.
In last week’s article, Honesty is the best policy: new common law duty to act honestly in contractual performance, Todd Melchoir considered the Supreme Court of Canada’s recent decision in Bhasin v Hrynew. For further reading on this landmark decision, please check out Norton Rose Fulbright’s bulletin titled Supreme Court recognizes good-faith contractual performance as an organizing principle of common law.… Continue Reading
Last week, in its landmark decision in Bhasin v Hrynew, the Supreme Court of Canada (the Court) faced the issue of whether Canadian common law imposes a duty on parties to perform their contractual obligations honestly. In that case, the Court clearly established: (1) a general obligation of good faith in the performance of contracts; and (2) a new 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.
The case considered a contractual dispute between an Alberta financial company, Canadian … Continue Reading
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
Join us on Thursday, August 21, 2014 for a webinar on recent cases in M&A.
Virtually every public company transaction is subject to shareholder litigation. While historically many such suits were resolved through disclosure-only settlements, courts are increasingly likely to scrutinize and, in some cases, reject such settlements. Further, the Delaware courts have awarded significant damages and attorneys’ fees in several recent high-profile cases, and claims involving certain conflicts of interest, and specifically financial adviser conflicts, appear to be gaining traction.
Our speakers will discuss recent developments in M&A cases and offer practical tips on reducing legal risk … Continue Reading
On Wednesday, September 10, 2014 to Wednesday, October 22, 2014 from 6:30 pm – 8:30 pm (US/Central), Norton Rose Fulbright will be presenting its 7th Annual Mergers & Acquisitions School for corporate, in-house legal, investment banking and private equity professionals in Houston, Texas.
This comprehensive program is designed for participants that desire to develop a thorough understanding of the M&A process and agreements from a legal perspective. Invited organizations will have the exclusive opportunity to enroll up to two professionals.
Wednesday, September 10, 2014
- Confidentiality, Non-Solicitation and Non-Circumvention Agreements • Legal Structures of Transactions – Asset Acquisitions, Stock/Equity