M&A WATCH: ‘ORDINARY COURSE OF BUSINESS’ DURING NOT-SO-ORDINARY TIMES

Delaware Supreme Court upholds ruling that breach of the “ordinary course of business” covenant warrants terminating transaction

On December 8, 2021, the Delaware Supreme Court upheld the Delaware Court of Chancery’s decision that Mirae Asset Financial Group (“Mirae”) was excused from closing a $5.8 billion acquisition of luxury hotels because the seller’s “drastic changes” to its operations in response to the COVID-19 pandemic—made without Mirae’s consent—constituted a breach of the ordinary course of business covenant (the “ordinary course covenant”). AB Stable VIII LLC v. MAPS Hotels & Resorts One LLC, Del., No. 71, 2021 (Del. Dec. 8, 2021). The decision reaffirms the Delaware courts’ plain-language approach to reading the ordinary course covenant and is especially notable in the context of business changes that the Court acknowledged were necessitated by and consistent with the industry’s response to COVID-19.

Read the full memo, ‘Ordinary Course of Business’ During Not-So-Ordinary Times.