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Market-Based MAC and Termination Fee Clauses on the Rise, But Subject to Pitfalls
Financial markets are unsettled. A result of the U.S. housing crisis has been a disruption in the general credit markets and increased scrutiny of transactions using higher risk debt financing, including leveraged buyout deals. Much of the disruption in the credit markets became evident during September 2007, and many equity sponsors and financing sources that had issued commitments prior to that time reconsidered their commitments later in the year. In many cases the cost of the financing was significantly more expensive, and in some cases the financing was no longer available. This situation has caused various equity sponsors and financing sources to re-examine their obligations to consummate a distressed commitment and their ability to back out of a deal.
Two types of contract clauses are commonly cited when a buyer or financing source desires not to make good on its commitment. These clauses are material adverse change ('MAC') clauses and termination fee clauses. Several recent cases show that good draftsmanship and a clear understanding of their intended effect are essential in heading off disputes when implementing these provisions.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.
Protecting Innovation in the Cyber World from Patent Trolls
With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.