In December 2020 the Delaware court held that the COVID-19 pandemic did not cause a Material Adverse Effect on the target of a merger because the MAE excluded ‘natural disasters and calamities’. Despite this, the buyer was not obliged to close the transaction and was entitled to terminate the sale agreement because the target made
The COVID-19 pandemic affects borrowers and lenders and their financing arrangements. The most significant clause to consider is the Material Adverse Effect (MAE) clause – this clause broadly captures unpredictable and unforeseen events or circumstances that would otherwise be difficult to incorporate into the agreement specifically. Read our article on the impacts of COVID-19 on
How does the COVID-19 pandemic affect borrowers and lenders and their financing arrangements?
A Material Adverse Effect (MAE) clause is included in most finance agreements. It is a catch-all concept to capture unpredictable and unforeseen events or circumstances that would otherwise be difficult to incorporate into the agreement specifically.
Broadly, a MAE clause covers a