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M&A Law

Investor’s Consent Not Required for Purchase Agreement Amendment that Benefited Investor, Says Delaware Chancery Court

By John Adgent

On June 8, 2020, the Delaware Chancery Court (the “Court”) entered judgment in favor of Yenni Income Opportunities Fund I, L.P., a private equity investment firm (the “Fund”), on all breach of contract claims brought by Braga Investment & Advisory, LLC (“Braga”). The dispute arose from Braga’s 2016 investment to acquire a minority interest in Steven Feller, P.E., LLC (“Newco”) as part of a transaction in which Newco acquired the business of Steven Feller P.E., PL, a provider of design engineering services (“Oldco”).

Braga based one of its breach of contract claims on a purchase agreement, dated November 16, 2015 (the “Agreement”), among the Fund, Oldco, and Oldco’s principals, which Braga never signed. Nevertheless, Braga alleged that the Fund breached Section 10.10 of the Agreement, which required the written consent of the parties thereto for amendments, by amending Exhibit H without Braga’s consent. Originally, the Agreement obligated Oldco to transfer “all of its assets” to Newco except for certain “Excluded Assets” listed on Exhibit H, which did not include any accounts receivable.

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