Business headlines have warned of a potential “chilling effect on buyouts” as a result of the decision recently issued by the U.S. District Court for the Southern District of New York in In re: Nine West LBO Securities Litigation (Dec. 4, 2020). Contrary to the views of some other commentators on the decision, we do not believe that the decision is likely to chill leveraged buyout activity, to upend how LBOs have been conducted, or to significantly increase the potential of liability for target company directors selling the company in an LBO.

This corporate update summarises certain decisions in the Court of Appeal and the Supreme Court relating to the balance sheet insolvency test, agreements to agree and the exercise of contractual discretion. The decisions clarify the law in a number of areas of day-to-day relevance.

UK BALANCE SHEET INSOLVENCY TEST: Implications for lenders and borrowers

Background

There have been a number of recent English Court judgments of interest in the corporate field and this corporate update reports on cases relevant in relation to warranties and representations in M&A transactions, restrictive covenants in acquisition agreements, the enforcement of foreign judgments in cross-border insolvency proceedings and the piercing of the corporate veil.

WARRANTIES OR REPRESENTATIONS? - Ensuring clarity of intention when drafting acquisition agreements

On 29 February 2012, the UK Supreme Court handed down its judgment concerning the treatment of client money in the long-running administration of Lehman Brothers International (Europe) (“LBIE”).