Post-M&A price adjustment due to undisclosed third-party claims

In an ICC arbitration, Dr. Tiago Duarte-Silva was retained by counsel in the US and Brazil to quantify the losses incurred following the purchase of the majority of share capital in a commercial bank. Shortly after closing, the acquirer began incurring legal costs relating to tens of thousands of third-party claims against the bank that had not been disclosed prior to the transaction.

Dr. Duarte-Silva submitted two expert reports and testified at the merits hearing about the proper amount of compensation due to the claimants. The damages included losses incurred by claimants after the closing date, reimbursements due for mandatory payments made on third-party claims, and entitlements to collect to cover any future losses. The damages quantified amounted to approximately R$550 million or approximately a third of the purchase price. After making some adjustments on legal grounds, the Tribunal adopted Dr. Duarte-Silva’s approach and quantification exactly, including his approach to interest.

The work in this matter was performed in collaboration across CRA’s offices in New York, São Paulo, Boston, and London. Dr. Duarte-Silva was supported in this matter by Peter Resnick, Daiane Nabuco, Rodrigo MorenoSwati Kanoria, Isabel Serrano Alas, Tahsin Anjum, Julian DiPersio, and others.

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