Sellers Should Beware of Closing Conditions Requiring Representations and Warranties to be "Accurate in All Respects"
In HControl Holdings v. Antin Infrastructure Partners, a Delaware court recently held that the buyer could terminate without closing its agreement to acquire a target company for $250 million. Due to a $215,000 ownership related claim by an ex-employee, the seller could not satisfy a closing condition that the seller’s fundamental representations and warranties remained “accurate in all respects” at the closing.
As background, when an acquisition agreement provides for a period between signing and closing, each party must typically satisfy, among other conditions to closing, a representation and warranty “bring-down” condition that sets forth the required level of accuracy for a party’s representations and warranties that must be met as of the closing date.
Often, this standard of accuracy for “general” representations and warranties relating to the target company is qualified by a materiality or Material Adverse Effect (MAE) standard. An MAE standard (in particular) is a very high threshold that provides a significant degree of deal certainty to sellers. However, those representations and warranties that the parties contractually agree are “fundamental representations” (often including, among other things, representations relating to the target company’s existence, capitalization structure, title to securities, the seller’s authority to enter the purchase contract, and certain tax matters) are often required to be brought down with a higher level of accuracy. Typical bring-down standards for fundamental representations are often something like “accurate in all respects” or “accurate in all respects, except for failures, individually and in the aggregate, de minimis in nature.” This variance in bring-down standards for fundamental representations is generally the result of negotiations between the parties, reflecting customary practices, and recent case law shows the variance can be significant.
The agreement at issue in HControl contained a condition to closing that brought down to closing specified “fundamental representations,” including a capitalization representation, without a carve out for material or de minimis exceptions. Sellers repeatedly attempted to insert a materiality qualifier into this provision, which would have significantly narrowed the circumstances in which the buyer could refuse to close the agreement. The buyer repeatedly struck this provision, and the final agreement required the “fundamental representations” to be “true and correct in all respects” at closing. When it came to light that an ex-employee had claims to $215,000 worth of the target company’s stock, the buyer asserted it was not required to consummate the $250 million purchase of the target company, and the court ultimately enforced the above described closing condition, which required strict compliance with the terms of the representation, and therefor allowed the buyer to “walk away” from the deal without having to close.
This decision underscores (1) the importance of understanding the variants in M&A closing condition bring-down standards and how each variant allocates risk among the parties and (2) at least in Delaware, courts tend to enforce the plain language of agreements even where the result may seem extreme or unfair.
Sellers, for their part, would do well to fight hard to ensure the representation and warranty bringdowns, even for “fundamental representations,” should be subject to a standard that allows for at least de minimus inaccuracies. This is particularly so given that the HControl Holdings decision has been followed in other Delaware court decisions as recently as June 2023 in Restanca, LLC v. House of Lithium, Ltd., No. 2022-0690-PAF, 2023 WL 4306074.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Often, this standard of accuracy for “general” representations and warranties relating to the target company is qualified by a materiality or Material Adverse Effect (MAE) standard. An MAE standard (in particular) is a very high threshold that provides a significant degree of deal certainty to sellers. However, those representations and warranties that the parties contractually agree are “fundamental representations” (often including, among other things, representations relating to the target company’s existence, capitalization structure, title to securities, the seller’s authority to enter the purchase contract, and certain tax matters) are often required to be brought down with a higher level of accuracy. Typical bring-down standards for fundamental representations are often something like “accurate in all respects” or “accurate in all respects, except for failures, individually and in the aggregate, de minimis in nature.” This variance in bring-down standards for fundamental representations is generally the result of negotiations between the parties, reflecting customary practices, and recent case law shows the variance can be significant.
The agreement at issue in HControl contained a condition to closing that brought down to closing specified “fundamental representations,” including a capitalization representation, without a carve out for material or de minimis exceptions. Sellers repeatedly attempted to insert a materiality qualifier into this provision, which would have significantly narrowed the circumstances in which the buyer could refuse to close the agreement. The buyer repeatedly struck this provision, and the final agreement required the “fundamental representations” to be “true and correct in all respects” at closing. When it came to light that an ex-employee had claims to $215,000 worth of the target company’s stock, the buyer asserted it was not required to consummate the $250 million purchase of the target company, and the court ultimately enforced the above described closing condition, which required strict compliance with the terms of the representation, and therefor allowed the buyer to “walk away” from the deal without having to close.
This decision underscores (1) the importance of understanding the variants in M&A closing condition bring-down standards and how each variant allocates risk among the parties and (2) at least in Delaware, courts tend to enforce the plain language of agreements even where the result may seem extreme or unfair.
Sellers, for their part, would do well to fight hard to ensure the representation and warranty bringdowns, even for “fundamental representations,” should be subject to a standard that allows for at least de minimus inaccuracies. This is particularly so given that the HControl Holdings decision has been followed in other Delaware court decisions as recently as June 2023 in Restanca, LLC v. House of Lithium, Ltd., No. 2022-0690-PAF, 2023 WL 4306074.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Related Lawyers
Related Articles
Related Capabilities
© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
In HControl Holdings v. Antin Infrastructure Partners, a Delaware court recently held that the buyer could terminate without closing its agreement to acquire a target company for $250 million. Due to a $215,000 ownership related claim by an ex-employee, the seller could not satisfy a closing condition that the seller’s fundamental representations and warranties remained “accurate in all respects” at the closing.
As background, when an acquisition agreement provides for a period between signing and closing, each party must typically satisfy, among other conditions to closing, a representation and warranty “bring-down” condition that sets forth the required level of accuracy for a party’s representations and warranties that must be met as of the closing date.
Often, this standard of accuracy for “general” representations and warranties relating to the target company is qualified by a materiality or Material Adverse Effect (MAE) standard. An MAE standard (in particular) is a very high threshold that provides a significant degree of deal certainty to sellers. However, those representations and warranties that the parties contractually agree are “fundamental representations” (often including, among other things, representations relating to the target company’s existence, capitalization structure, title to securities, the seller’s authority to enter the purchase contract, and certain tax matters) are often required to be brought down with a higher level of accuracy. Typical bring-down standards for fundamental representations are often something like “accurate in all respects” or “accurate in all respects, except for failures, individually and in the aggregate, de minimis in nature.” This variance in bring-down standards for fundamental representations is generally the result of negotiations between the parties, reflecting customary practices, and recent case law shows the variance can be significant.
The agreement at issue in HControl contained a condition to closing that brought down to closing specified “fundamental representations,” including a capitalization representation, without a carve out for material or de minimis exceptions. Sellers repeatedly attempted to insert a materiality qualifier into this provision, which would have significantly narrowed the circumstances in which the buyer could refuse to close the agreement. The buyer repeatedly struck this provision, and the final agreement required the “fundamental representations” to be “true and correct in all respects” at closing. When it came to light that an ex-employee had claims to $215,000 worth of the target company’s stock, the buyer asserted it was not required to consummate the $250 million purchase of the target company, and the court ultimately enforced the above described closing condition, which required strict compliance with the terms of the representation, and therefor allowed the buyer to “walk away” from the deal without having to close.
This decision underscores (1) the importance of understanding the variants in M&A closing condition bring-down standards and how each variant allocates risk among the parties and (2) at least in Delaware, courts tend to enforce the plain language of agreements even where the result may seem extreme or unfair.
Sellers, for their part, would do well to fight hard to ensure the representation and warranty bringdowns, even for “fundamental representations,” should be subject to a standard that allows for at least de minimus inaccuracies. This is particularly so given that the HControl Holdings decision has been followed in other Delaware court decisions as recently as June 2023 in Restanca, LLC v. House of Lithium, Ltd., No. 2022-0690-PAF, 2023 WL 4306074.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Often, this standard of accuracy for “general” representations and warranties relating to the target company is qualified by a materiality or Material Adverse Effect (MAE) standard. An MAE standard (in particular) is a very high threshold that provides a significant degree of deal certainty to sellers. However, those representations and warranties that the parties contractually agree are “fundamental representations” (often including, among other things, representations relating to the target company’s existence, capitalization structure, title to securities, the seller’s authority to enter the purchase contract, and certain tax matters) are often required to be brought down with a higher level of accuracy. Typical bring-down standards for fundamental representations are often something like “accurate in all respects” or “accurate in all respects, except for failures, individually and in the aggregate, de minimis in nature.” This variance in bring-down standards for fundamental representations is generally the result of negotiations between the parties, reflecting customary practices, and recent case law shows the variance can be significant.
The agreement at issue in HControl contained a condition to closing that brought down to closing specified “fundamental representations,” including a capitalization representation, without a carve out for material or de minimis exceptions. Sellers repeatedly attempted to insert a materiality qualifier into this provision, which would have significantly narrowed the circumstances in which the buyer could refuse to close the agreement. The buyer repeatedly struck this provision, and the final agreement required the “fundamental representations” to be “true and correct in all respects” at closing. When it came to light that an ex-employee had claims to $215,000 worth of the target company’s stock, the buyer asserted it was not required to consummate the $250 million purchase of the target company, and the court ultimately enforced the above described closing condition, which required strict compliance with the terms of the representation, and therefor allowed the buyer to “walk away” from the deal without having to close.
This decision underscores (1) the importance of understanding the variants in M&A closing condition bring-down standards and how each variant allocates risk among the parties and (2) at least in Delaware, courts tend to enforce the plain language of agreements even where the result may seem extreme or unfair.
Sellers, for their part, would do well to fight hard to ensure the representation and warranty bringdowns, even for “fundamental representations,” should be subject to a standard that allows for at least de minimus inaccuracies. This is particularly so given that the HControl Holdings decision has been followed in other Delaware court decisions as recently as June 2023 in Restanca, LLC v. House of Lithium, Ltd., No. 2022-0690-PAF, 2023 WL 4306074.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Related Lawyers
Related Articles
Related Capabilities
© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
News and Insights
Amanda Shafer Berman to Speak on Energy and Administrative Law at WEN-DC Webinar
As the Supreme Court's new Term begins, Jenner & Block Partner Amanda Shafer Berman will join a Women's Energy Network of Washington, DC (WEN-DC) webinar on how the Court's decisions are shaping the energy sector.
October 14, 2026
Publications
Partner Amanda Shafer Berman Quoted in Bloomberg Law on Senate Permitting Overhaul Bill
Partner Amanda Shafer Berman was quoted in an October 5 Bloomberg Law article, "Permitting Deal Gives Projects Defense Against Litigation Delays," on the Senate's new permitting overhaul package and its expected impact on litigation over federal permitting reversals.
October 2026
Event
Partner John Storino to Speak at Sandpiper Partners' “AI and Outside Counsel Guidelines Roundtable”
On October 8, Partner John Storino will serve as a panelist at the “AI and Outside Counsel Guidelines Roundtable,” hosted by Sandpiper Partners in Chicago.
October 8, 2026
Event
Partner Meghan Greenfield to Speak on Supreme Court Climate Case at Edison Electric Institute's Fall Legal Conference
On Wednesday, October 7, Partner Meghan Greenfield will speak on a panel titled "Boulder County v. Suncor Energy: What the Supreme Court's Climate Case Means for the Energy Industry" at the Edison Electric Institute's Fall Legal Conference in Salt Lake City, Utah.
October 7, 2026
Publications
The Form Rules Everything: A Seventh Circuit Ruling on ERISA's Substantial Compliance Doctrine
Partner Joseph Torres and Special Counsel Jennifer Beach authored an article for Employee Relations Law Journal examining the Seventh Circuit's decision in Packaging Corp. of America Thrift Plan for Hourly Employees v. Langdon, a ruling that addresses both the standard of review in ERISA interpleader actions and the continued viability of the substantial compliance doctrine for changing plan beneficiaries.
October 5, 2026
Recognition
Jenner & Block Rises in American Lawyer Rankings for Summer Associate Experience
Jenner & Block ranked 14th nationally in The American Lawyer’s 2026 Summer Associate Satisfaction Survey, jumping 10 spots from last year. The annual survey measures summer associate satisfaction at US law firms based on ratings provided directly by summer associates across key firm qualities.
October 2, 2026