Warranty & Indemnity Insurance in Distressed Sales
In an M&A transaction, where dealing with a seller undergoing financial distress, the buyer may have concerns regarding its ability to obtain sufficient recourse against the distressed seller for a breach of a warranty or an indemnity claim under the acquisition agreement (Agreement). Under such circumstances, Warranty &Indemnity (W&I) insurance can serve as an alternative avenue of recourse and thereby provide the buyer with greater comfort and security.
From a distressed seller’s perspective, W&I insurance can facilitate the transaction and enable the seller to optimize value from the sale, as the buyer will have reassurance that it might not otherwise have with regard to the strength and reliability of its contractual protections under the Agreement.
Download this client advisory to find out more about considerations, and risk transfer solutions in sales involving distressed sellers.