"'Representation and warranty' insurance, which has emerged for use in M&A transactions, may be a possible solution to deal with unknown risks that could otherwise make the parties walk away from a proposed transaction...This insurance can be useful in many circumstances, including these:
when a seller wants limited or no exposure to unknown risks that could give rise to post-closing claims for indemnification;
as an alternative to an escrow arrangement, when a buyer is concerned that a seller has inadequate creditworthiness to honour its indemnification commitment;
when a buyer may not want to pursue an indemnification claim against a seller for business reasons (such as when the buyer is to employ the seller).
Either the buyer or the seller can obtain representation and warranty insurance and, depending on the circumstances, may do so without the other’s knowledge..."
Read more in this Torys LLP article from Mondaq.
Sunday, February 19, 2006
Consider R&W Insurance
Posted by
Anthony Cerminaro
at
Sunday, February 19, 2006
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