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Who would anticipate a pandemic? L Brands did


In February 2020, Sycamore Partners agreed to buy 55% of Victoria Secret's lingerie brand for $525 million. Then, the majority of the US was shut down by COVID19. Because of L Brands actions in response to COVID19, Sycamore attempted to renegotiate the terms of the acquisition. L Brands declined.


On April 22nd, Sycamore sued L Brands in Delaware Chancery Court claiming that L Brands breached the acquisition agreement and that they would not complete the acquisition (see Sycamore complaint, hosted on Mega.nz.


On April 23rd, L Brands countersued Sycamore in Delaware Chancery Court asserting that the parties agreed in the acquisition agreement that Sycamore would bear the direct and indirect risk of any pandemic. In the agreement, the parties excluded pandemic from the definition of a Material Adverse Event (see L Brands complaint, hosted on Mega.nz).


[A]ny state of facts, circumstance, condition, event, change, development, occurrence, result or effect (i) that would prevent, materially delay or materially impede the performance by Parent of its obligations under this Agreement or Parent's consummation of the transactions contemplated by this Agreement; or (ii) that has a material adverse effect on the financial condition, business, assets, or results of operations of the Business, excluding, in the case of clause (ii), any state of facts, circumstance, condition, event, change, development, occurrence, result or effect to the extent directly or indirectly resulting from . . . (E) changes or conditions generally affecting the industry of the Business . . . [or] (H) the existence, occurrence or continuation of any pandemics, tsunamis, typhoons, hail storms, blizzards, tornadoes, droughts, cyclones, earthquakes, floods, hurricanes, tropical storms, fires or other natural or manmade disasters or acts of God or any national, international or regional calamity.

Complaint at paragraph 29 (emphasis added).


You have to hand it to L Brands's attorneys. They appear to be a bit prescient and to have done a great job drafting this provision.


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