In Emposimato v. CIFC Acquisition Corp.,1 the Appellate Division, First Department, affirmed rulings in a lengthy and detailed opinion2 by Justice Bernard J. Fried that addressed various contract law points arising from a corporate acquisition. The case illustrates issues that can arise when the parties agree to a transaction subject to satisfaction with subsequent disclosure and investigation.
Background
Sellers, two individuals, owned Concordia International Forwarding Corp. Sellers and Concordia entered into a Securities Purchase Agreement (SPA) with CIFC Acquisition Corp., an acquisition vehicle for Jefferies Capital Partners IV, L.P., in January 2008, pursuant to which Buyer would acquire the stock of Concordia and certain of its affiliates. The SPA contemplated consummation of the acquisition after a sequence of specified steps, including: (i) Sellers’ delivery to Buyer of the “final” versions of schedules that the SPA specifically identified and prescribed; (ii) Buyer’s performance of initial due diligence which included the review of certain documents, information and materials relating to Concordia’s business operations; (iii) if Buyer were satisfied with the schedules and its initial due diligence, Buyer would deliver a so-called Acknowledgment to Sellers; and (iv) within seven days of such delivery, Buyer would conduct and complete a second phase of due diligence (the “Sensitive Diligence”) that would include visits to Concordia’s facilities and telephone interviews of its customers and vendors.
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