A Delaware court ruled in favour of South Korean investment bank Mirae Asset Dewoo Co Ltd and affiliates in a suit against China’s Anbang Insurance Group over the termination of a $5.8 billion contract to buy 15 luxury US hotels.
Last year, a consortium led by Mirae agreed to purchase the hotels from Anbang, which had come under the control of the Chinese government in 2018 and was selling its overseas assets. However, Mirae did not close the deal on the scheduled April 2020 date, claiming that Angang’s “representations and warranties were inaccurate” and that the insurer had “failed to comply with its covenants under the sale agreement”.
Anbang then filed suit against Mirae in Delaware in an attempt to force the company to fulfil its promised payment, according to the court filing.
The Delaware Court of Chancery found that the Anbang subsidiary that owns the hotels had made extensive changes to its business to cope with the COVID-19 pandemic, including employee layoffs, furloughs and the closure of amenities. These measures led to a failure to meet a condition in the contract that business be “conducted in the ordinary course of business”, thus allowing Mirae to terminate the agreement, the court found.
The court ruled that Anbang should return contract payment to Mirae Asset along with an additional $3.685 million to cover transaction cost and related litigation expenses. Mirae said in a regulatory filling that will respond through its legal representative depending on whether the plaintiff appeals.
[ymal]
The case could set a precedent for deals that have had their valuations drop since the onset of the COVID-19 pandemic.
Mirae Asset shares closed 6.5% higher in Seoul following the news.
