Chancery Ruling Highlights Fraud Claim Risk For PE Sellers

Law360 (September 16, 2020, 2:42 PM EDT) -- The case of Agspring Holdco LLC v. NGP X US Holdings LP involves the sale of a portfolio company, Agspring, by private equity firm NGP Energy Capital Management LLC to funds affiliated with private equity firm American Infrastructure MLP.

At the pleading stage of litigation, the Delaware Court of Chancery found it reasonably conceivable that: (1) the Agspring officers deliberately concealed from the buyer a steep decline in earnings that occurred before and after the signing and closing; and (2) as a result of the decline, certain of the representations and warranties in the sale agreement and a related financing agreement...

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