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"kTitle" : "Delaware Court of Chancery Issues Major Decision on COVID-Related Issues in M&A Deals, Allows Buyer to Terminate Agreement for Breach of Operating Covenant",
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"kBody": "&lt;p&gt;The decision addresses two major issues involved in disputes over the obligation to close M&amp;amp;A deals in the face of severe changes to the target business as a result of COVID-19. The Chancery Court held that the effects of the pandemic, though presumptively material and adverse to the target business in the case at hand, did not constitute a Material Adverse Effect (&ldquo;MAE&rdquo;) because they were negated by a carveout in the MAE definition for &ldquo;natural disasters and calamities.&rdquo; At the same time, the Court also held that changes made to the business by the seller that were outside the ordinary course, even if justifiable for the sake of preserving the target business, ran afoul of the seller&rsquo;s pre-closing operating covenant. &lt;sup&gt;1&lt;/sup&gt;&lt;/p&gt; &lt;p&gt;This &lt;i&gt;Newsflash&lt;/i&gt; provides a brief overview of the decision.&lt;/p&gt; &lt;p&gt;&lt;b&gt;Background&lt;/b&gt;&lt;/p&gt; &lt;p&gt;The dispute arose from a Sale and Purchase Agreement entered into on September 10, 2019, for the sale of 15 luxury hotels for a total purchase price of $5.8 billion. Plaintiff seller AB Stable VIII LLC (&ldquo;Seller&rdquo;) is an indirect subsidiary of Dajia Insurance Group, Ltd. (&ldquo;Dajia&rdquo;), a corporation organized under the law of the People&rsquo;s Republic of China. Dajia is the successor to Anbang Insurance Group., Ltd. Seller owns all of the membership interests in Strategic Hotels &amp;amp; Resorts LLC (the &ldquo;Company&rdquo;), a Delaware limited liability company. The Company in turn owns all of the membership interests in 15 limited liability companies, each of which owns a luxury hotel.&lt;/p&gt; &lt;p&gt;Defendant buyer MAPS Hotel and Resorts One LLC (&ldquo;Buyer&rdquo;) is a special purpose vehicle formed for purposes of the transaction. Its ultimate parent company is Mirae Asset Financial Group (&ldquo;Mirae&rdquo;), a financial services conglomerate based in Korea. Three Mirae affiliates executed equity commitment letters binding them to contribute a total of $2.2 billion to Buyer at closing. The balance of the purchase price was to be funded with debt financing.&lt;br&gt; &lt;/p&gt; &lt;p&gt;For purposes of discussion, the agreement contained the following pertinent provisions:&lt;/p&gt; &lt;ul&gt; &lt;li&gt;&lt;b&gt;&lt;i&gt;No-MAE representation&lt;/i&gt;&lt;/b&gt;. Seller represented that &ldquo;since July 31, 2019, there had not been any changes, events, states of facts, or developments, whether or not in the ordinary course of business that, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect.&rdquo;&lt;br&gt; &amp;nbsp;&lt;/li&gt; &lt;li&gt;&lt;b&gt;&lt;i&gt;MAE definition&lt;/i&gt;&lt;/b&gt;. The agreement defined &ldquo;Material Adverse Effect&rdquo; to mean any event, change, occurrence, fact or effect that would have a material adverse effect on the business, financial condition, or results of operations of the Company and its Subsidiaries, taken as a whole, other than any event, change, occurrence or effect arising out of, attributable to or resulting from&rdquo; nine enumerated carveouts. The third carveout was for &ldquo;natural disasters or calamities.&rdquo; The MAE definition did not contain a carveout explicitly for pandemics, epidemics or other health crises (which was not unusual for acquisition agreements entered into before the onset of COVID-19). The MAE definition also did not contain an exclusion from the carveout for events that have a disproportionate effect on the Company.&lt;br&gt; &amp;nbsp;&lt;/li&gt; &lt;li&gt;&lt;b&gt;&lt;i&gt;Bring-down closing condition&lt;/i&gt;&lt;/b&gt;. Buyer was not obligated to close if Seller&rsquo;s representations were not true and correct as of the closing date, unless &ldquo;the failure to be so true and correct . . . would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.&rdquo; The bring-down contained a materiality scrape to avoid the double-MAE problem.&lt;br&gt; &amp;nbsp;&lt;/li&gt; &lt;li&gt;&lt;b&gt;&lt;i&gt;Interim operating covenant&lt;/i&gt;&lt;/b&gt;. The interim operating covenant provided that &ldquo;. . . between the date of this Agreement and the Closing Date, unless the Buyer shall otherwise provide its prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), the business of the Company and its Subsidiaries shall be conducted only in the ordinary course of business consistent with past practice in all material respects . . .&rdquo;&lt;br&gt; &amp;nbsp;&lt;/li&gt; &lt;li&gt;&lt;b&gt;&lt;i&gt;Covenant-compliance closing condition&lt;/i&gt;&lt;/b&gt;. The agreement made it a condition to Buyer&rsquo;s obligation to close that &ldquo;Seller shall have performed in [all] material respects all obligations and agreements and complied in all material respects with all covenants and conditions required by this ...",
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"kBody": "&lt;h2&gt;&lt;p&gt;&lt;span class=&quot;intro-para&quot;&gt;Notwithstanding the announcement by the Government Equalities Office and the Equality and Human Rights Commission (EHRC) on 24 March 2020 that due to the COVID-19 pandemic, enforcement of gender pay gap reporting for the reporting year 2019/20 would be suspended, the profile of equal pay issues has not diminished over recent months, not least in view of a number of recent developments that have attracted considerable publicity.&lt;/span&gt;&lt;br /&gt; &lt;/p&gt; &lt;/h2&gt; &lt;p&gt;In January 2020, BBC presenter Samira Ahmed won her high profile equal pay claim that she was doing work of equal value to that of her colleague Jeremy Vine and that there were no material factors on which the BBC could rely to defend his significantly higher pay.&lt;/p&gt; &lt;p&gt;The long running litigation concerning the supermarket Asda on the question of whether its predominantly female supermarket retail employees can compare themselves with predominantly male distribution depot employees for the purposes of an equal pay claim also continues. This litigation reached the Supreme Court in July 2020 and judgment is expected later this year.&lt;/p&gt; &lt;p&gt;The Fawcett Society, which campaigns for gender equality and women&rsquo;s rights at work, at home and in public life, is currently supporting a private member&rsquo;s bill in Parliament, the key proposal of which is to give women who suspect they are not getting equal pay the &lsquo;Right to Know&rsquo; what a male colleague doing the same work is paid. Currently if a woman suspects that she is being paid less than a male colleague for doing the same work, she has no legal right to obtain information about that colleague&rsquo;s pay until she has started employment tribunal proceedings. The proposed bill creates a new legal obligation on employers to provide certain information about a comparator colleague&rsquo;s pay to an employee who requests this information in relation to a suspected equal pay issue. The bill is currently moving through the legislative stages in Parliament &ndash; it was introduced in the House of Commons by Stella Creasy MP on 20 October 2020 and its second reading in Parliament is scheduled for 15 January 2021.&lt;br /&gt; &lt;br /&gt; &lt;b&gt;Equal pay overview&lt;/b&gt;&lt;/p&gt; &lt;p&gt;By way of brief overview, to bring an equal pay claim a woman must establish that she is doing like work, work rated as equivalent or work of equal value to a man, and that she is being paid or treated less favourably than the man. The employer must then show that there is an explanation for the difference which is not related to sex either directly or indirectly. If it can show such a reason, called a material factor, then it has a defence to the equal pay claim. In order to rely on this defence the employer must show that the material factor is genuine, and it must be material in the sense of being significant and relevant. The material factor does not have to justify the difference in pay &ndash; the employer merely has to show that the material factor relied upon is the reason for the difference in pay and is not related to the sex of the claimant or those with whom she seeks to compare herself.&lt;/p&gt; &lt;p&gt;&lt;b&gt;Guidance from the Court of Appeal - &lt;i&gt;Walker v Co-operative Group Limited&lt;/i&gt;&lt;/b&gt;&lt;/p&gt; &lt;p&gt;In August 2020, in &lt;a href=&quot;https://www.bailii.org/ew/cases/EWCA/Civ/2020/1075.html&quot; target=&quot;_blank&quot;&gt;&lt;i&gt;Walker v Co-operative Group Limited&lt;/i&gt;&lt;/a&gt;, the Court of Appeal gave useful guidance on how equal pay cases should be approached, finding that an employment tribunal (ET) had wrongly approached the question of when an employer may rely on the material factor defence.&lt;/p&gt; &lt;p&gt;Ms Walker was promoted to the position of Group Chief HR Officer for the Co-operative Group Limited in February 2014. At the time the Co-op was in financial crisis, and the executive team was appointed to deliver a critical transformation of the business, and remunerated accordingly.&lt;/p&gt; &lt;p&gt;Ms Walker was in Tier 4 of the executive team. Two male colleagues in Tier 4, the Chief External Affairs Officer and the Group General Counsel were paid more than her. The Co-op&rsquo;s material factor defence to Ms Walker&rsquo;s equal pay claim was based on four reasons on which it relied for the pay differentials in question. These were that:&lt;/p&gt; &lt;ol&gt; &lt;li&gt;the roles of the two male colleagues were seen as vital to the immediate survival of the Co-op;&lt;/li&gt; &lt;li&gt;Ms Walker was a newly appointed executive whereas her male colleagues had many years of experience at that level;&lt;br /&gt; &lt;/li&gt; &lt;li&gt;the two male executives were a &ldquo;flight risk&rdquo; because they had been appointed by someone who had left the Co-op and it was crucial in a time of crisis that they were retained; and&lt;br ...",
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"kTitle" : "(Yet) Further Guidance on Extended Furlough Scheme Published",
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"kBody": "&lt;p&gt;Following the recent &lt;a href=&quot;https://www.dechert.com/knowledge/onpoint/2020/11/furlough-scheme-extended-and-job-support-scheme-postponed.html?utm_source=vuture&amp;amp;utm_medium=email&amp;amp;utm_campaign=onpoint&quot; target=&quot;_blank&quot;&gt;announcement&lt;/a&gt; of the extension of the Coronavirus Job Retention Scheme (&lt;b&gt;CJRS&lt;/b&gt; or &ldquo;furlough scheme&rdquo;) and the suspension of the Government&rsquo;s Job Support Scheme and Job Retention Bonus and then of the further extension to the furlough scheme to 31 March 2021 and additional details as to its &lt;a href=&quot;https://www.dechert.com/knowledge/onpoint/2020/11/another---longer---extension-to-the-furlough-scheme.html?utm_source=vuture&amp;amp;utm_medium=email&amp;amp;utm_campaign=onpoint&quot; target=&quot;_blank&quot;&gt;operation&lt;/a&gt;, the Government updated its various guidance documents yesterday. Employers utilising the furlough scheme will need to review this guidance to ensure that their ongoing arrangements comply with the requirements of the CJRS.&lt;/p&gt; &lt;p&gt;&lt;b&gt;Updated Guidance&lt;/b&gt;&lt;/p&gt; &lt;p&gt;The guidance is now contained in thirteen separate notes as follows:&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme?utm_source=1e21bf8c-b3d9-483e-8599-45493fc0feb2&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Check if your employer can use the Coronavirus Job Retention Scheme&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme?utm_source=a9b20969-e98f-4b28-ae83-2e76c23f224d&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme?utm_source=3828fbca-86f4-4f35-b476-3e20599ed05e&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Claim for wages through the Coronavirus Job Retention Scheme&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages?utm_source=ab85da6c-141f-43e8-b8ac-52d7e0cf35ba&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Find examples to help you calculate your employees' wages&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme?utm_source=d5b4e22c-db98-44b3-aa52-76c0349a6a5a&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Calculate how much you can claim using the Coronavirus Job Retention Scheme&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme?utm_source=4d0704c2-1bf1-43e5-9959-a1a217137e74&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Steps to take before calculating your claim using the Coronavirus Job Retention Scheme&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/government/publications/individuals-you-can-claim-for-who-are-not-employees?utm_source=d13e33d4-9226-4ad8-a692-94db5c3da779&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Other types of employees you can claim for&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme?utm_source=72a0ba81-c568-401a-9258-344187870c3c&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/pay-coronavirus-job-retention-scheme-grants-back?utm_source=576e6369-5482-4c6a-8546-2b99c3c228d0&amp;amp;utm_medium=email&amp;amp;utm_campaign=govuk-notifications&amp;amp;utm_content=immediate&quot; target=&quot;_blank&quot;&gt;Pay Coronavirus Job Retention Scheme grants back&lt;/a&gt;&lt;/p&gt; &lt;p&gt;&lt;a href=&quot;https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19&quot; target=&quot;_blank&quot;&gt;Holiday entitlement and pay during coronavirus&lt;/a&gt;&lt;/p&gt; ...",
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