국제 M&A에서의 Ordinary Course of Business 확약－미국 델라웨어 주법에 따른 해석론을 중심으로－

In most M&A transactions with international elements, the laws of a common law jurisdiction is often the governing law. In particular, when one or more of the seller, the buyer, and the target company has a nexus to the United States, the laws of the State of Delaware is typically chosen as the governing law. Under Delaware law, a covenant in M&A agreement binds the parties to do or refrain from specific actions between signing and closing as one of the condition precedents, and is a ground for termination if not complied with. Ordinary course of business covenant is one of the typical covenants found in M&A agreements. As the COVID-19 pandemic required companies all around the world to make extraordinary changes to their business in response thereto, including suspending or curtailing the company’s operations. AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC is a leading case which dealt with the issue of whether the changes made in response to the pandemic amount to a breach of the ordinary course of business covenant. In past cases, the Delaware court found conducts of target companies that were not conventional or normal from the perspective of average companies to be not ordinary. In other words, court held that the target company failed to operate in the ordinary course of busines if it engaged in fraudulent or deceptive conducts. AB Stable is different from these cases in that the conducts by the target company were warranted by the pandemic and the changes made were reasonable responses to the pandemic. In AB Stable, the court held that the ordinary course of business covenant required the seller to maintain the normal and ordinary routine of the business, and did not mean doing what was ordinary in the circumstances. Also, M&A agreements require the seller to obtain buyer’s consent before making any deviation from the ordinary course of business, which shall not be unreasonably withheld. If the seller did not request the buyer’s consent, the seller’s breach is not justified by the fact that the buyer would have been required to consent had the seller requested one. The covenant requires that the company “shall” maintain the normal and ordinary routine of the business consistent with its past practice, and mere best efforts do not relieve the seller from the breach. For the breach of the covenant to amount to a ground for refusing to close or terminating the agreement, the deviation must significantly alter the total mix of information available to the buyer when viewed in the context of the parties’ contract. Based on the foregoing understanding and analysis, parties to an M&A transaction will be able to allocate risks between them by adjusting the wording of the ordinary course of business covenant. In particular, adding “only” before “consistent with past practice” will exclude the past practice of other companies in the industry from being considered. Also, this article will provide a helpful guidance on determining proper response to changes in circumstances and developing strategies for potential disputes.