John Lowe, partner, and Paul Bartlett, associate, recently had their “NY Stock Purchase Ruling Shows Value of Proper Disclosures” article published by Law360. The article addresses the Supreme Court of New York’s decision arising from GBIG Holdings v. Resolution Life LP, that the buyer (GBIG Holdings) had breached two representations and warranties it made in the SPA. The buyer had to pay damages to the seller (Resolution Life LP) amounting to more than $50 million. The court also cited that the seller had prior knowledge of the buyer’s regulatory issues. The article says,
“The court refers to the seller’s prior knowledge of the buyer’s ongoing regulatory issues as ‘the arresting irony of this case.’ There is also Socratic irony in the court’s failure to discuss how the seller’s prior knowledge impacted its reliance on the buyer’s representations or the buyer’s liability on those representations.”
“While it is unusual for a buyer to make extensive representations in a cash transaction, if those representations are materially false, the buyer will be exposed to liability for damages. The buyer’s counsel should carefully review those representations with the buyer to address this risk.”
Click here to read the full article.