Yonaton Aronoff and Evan Bolla Secure Six-Figure Break-up Fee For Client Over Defendant’s Failure to Close $20M+ Acquisition

September 16, 2022

A federal judge ruled Wednesday that HSW client UCC Asset Management is owed a six-figure break-up fee from Global Merchant Bond Series, Inc. for its failure to purchase in a timely manner UCC’s interest in a lending company under a letter of intent agreement. HSW partners Yonaton Aronoff and Evan Bolla filed the motion for summary judgment that prompted this ruling.

The firm secured this ruling through a cost-effective and streamlined discovery and motion practice strategy specially-tailored to the economic realities of the case.

Global entered into a 2019 letter of intent agreement with UCC to purchase three quarters of UCC’s membership interest in Entrepreneur Growth Capital LLC, a company that provides asset-based lending for small and mid-sized businesses.  The agreement required Global to pay UCC a six-figure “break-up” fee if Global did not close on its purchase within a 60-day timeframe absent certain specified exceptions.

While the parties contemplated amending the initial letter of intent, no amended agreement was ever finalized, and Global broke off communications. In its ruling, the court agreed with HSW that that Global was liable for the break-up fee under the facts presented.

Bolla said the dispute, which the judge likened to one that “could appear on a first-year law school exam,” should serve as a reminder for companies to pay close attention to the bargained-for consequences of backing out, and when left with no alternative, negotiate an exit in good faith.

“No matter the dollar value assigned to a deal, every participant should be attentive and responsive to the needs of those on the other side of the deal table, even if disagreements arise,” Bolla said. “I hope this result serves as a reminder that where a party has an obligation to negotiate in good faith and a break-up fee is a play, open communication and dialogue is almost always preferable to taking your ball and going home.”