Securing Stability in Asset Acquisition by Addressing Receivables Dispute Risk

1. The Client's Situation

After concluding a contract to acquire the assets and goodwill of a particular company, the client was concerned about the possibility that a provisional attachment, raised by the transferor's business counterparty on the ground of non-performance of an obligation, might impede the securing of ownership of the acquired assets. In particular, faced with a crisis in which the fundamental purpose of the contract could be frustrated due to an announcement of an auction of the attached assets, the client requested advice on legal response measures.

Your Legal Team analyzed whether the representations and warranties clauses in the contract had been breached, and presented three response measures to minimize the transferee's legal risk. First, exercising the defense of simultaneous performance, by which the client could withhold payment of the balance as long as the transferor could not deliver the assets; second, a plan whereby the client, as an interested third party, would discharge the obligation and set it off; and third, reviewing the possibility of demanding an adjustment of the acquisition price based on the results of asset due diligence. We also advised on enforcement-defense strategies, such as a prohibition on the continued use of the trade name and the filing of a third-party objection suit, in preparation for similar situations in the future.

With the assistance of Your Legal Team, the client was able to block in advance the legal risks that could arise before performance of the contract and to significantly reduce the possibility of loss in the asset-acquisition process. Through this, it established strategic decision-making regarding payment of the balance and acquisition of the assets, and secured practical legal measures that would enable it to respond effectively to similar disputes in the future.