Craig A. Newman, Patricia C. OPrey, Publications
Memorandum: Recent Development Relating to MAC Clause - MAC Clause Asserted to Prevent Liability for Exit Financing in Solutia Bankruptcy Proceeding
February 11, 2008
Material Adverse Change, or "MAC", provisions have been increasingly used by investors in leveraged buyout situations to avoid liability in the case of a broken deal. This week, in a case arising from the Solutia Inc. bankruptcy proceedings, Solutia Inc. asserted claims against its lenders for alleged breach of a commitment to provide exit financing. The lenders asserted that a MAC occurred in the loan syndication market such that their obligation to perform under the Commitment Letter was excused. The memorandum below was prepared by our partners Craig A. Newman and Patricia C. O'Prey and discusses the claims asserted in the complaint and analyzes the MAC clause at issue.
