Saudi Seller vs. French Buyer
Claim Type – M&A, R&W Breach, Claim Due Diligence
Jurisdiction – KSA, Riyadh

CHALLENGE

In this interesting M&A post-closing case, the buyer’s organization lacked an adequate standardized claim management system, which led to the buyer overlooking underlying contractual and statutory claims. It led to the loss of significant profits due to bias and reluctance on the part of management or the technical staff to deal with these contentious items that were occasionally justified by the dynamics and goals of the transaction.

Rather than waiting for them to be discovered, prior to any statute of limitations, the seller company availed of Practiclaim’s accessible solution and contacted its claim management professionals to investigate, monitor, and assess the matter.

PRACTICLAIM SOLUTION

The claims manager acted as a dedicated claim facilitator for the seller, on a non-exclusive and non-binding basis, throughout the claim process. Upon discovering the untapped target’s claims, the claims manager coordinated with in-house staff to analyze the prospects of the claim as well as the impact on both financial and economic levels.

A Pre-Assessment note addressed specific legal aspects, relevant facts, along with setting out the prospective claim’s projected milestones to reach the intended outcomes. The document was submitted internally, without incurring any costs at this stage, giving claim providers’ counsel and management much needed visibility.

A M&A specialist law firm – curated through our litigation management platform’s partners following innovative selection methods and a contingency fee arrangement – was appointed after further providing a targeted claim evaluation and proposal, all at no fee, in addition to monitoring deadlines and time bars by the claim manager.

The dispute notice threatened to trigger management liabilities, breach of trust litigation, and rescission of the transaction. All claim service stakeholders were compensated on a pre-agreed contingency plan – conditional on the price adjustment rate – without the need for litigation.

By integrating all relevant functions under one umbrella and aligning interests, the Claimholder and in-house counsel were able to initiate the appropriate legal steps with the appointed firm; having the claim manager on board saved time, resources and legal costs.

EFFECT

Through a no-cost insourced claim management scheme, hidden and potential contentious items were discovered and properly analyzed, prior to resolution – without time or specialized expertise to conduct a diligent claim assessment post-closing.

The in-house legal department was turned into a profit centre, unlocking considerable earnings, generated from targeted claim management. Further, Claimholder directors’ liability, beyond the usual contractual representations and warranties, and shareholdings’ value deterioration, were avoided, resulting in a multitude of remedies for the transaction and leveraged settlement.

Practclaim’s solution improved consistency, overall performance, and time management, resulting in best value outcomes.

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