15 Mar The Delaware Chancery Court Reminds us Why Notice Dates Matter
A recent column by Matt Levine from Bloomberg details a costly saga of a multi-billion dollar merger blown apart by the failure to remember a Notice Date in a contract. See the story here, complete with a sidebar about the court’s footnote discussion of euphemisms for the word “prejudiced. It’s opinion here, the court noted that after two days of trial, involving eight live witnesses and over seven hundred exhibits and eighteen preceding depositions, we learned (once again) that corporations who know what’s in their contracts achieve far better results. Here, as the minutes ticked down to the passing of the End Date, Rent-A-Center principals watched Vintage closely. Rent-A-Center personnel acted entirely in the corporate interest, anticipating the stroke of midnight when Rent-A-Center termination right would ripen and could be exercised. Meanwhile, there was no gamesmanship in Vintage actions it simply forgot to exercise its contractual right. The result: a billion-dollar merger broken apart and a termination fee in excess of $100 million that may need to be paid. According to the court: “Adjectives are often misplaced in legal opinions”; nonetheless, I am comfortable describing the size of the reverse breakup fee, in light of the entity to be acquired, as enormous.