In one of the first COVID-19-related cases, the Amsterdam District Court has ordered private equity firm Nordian Capital to proceed with the signing of a share purchase agreement (SPA) with the owners of J-Club International BV. J-Club is a market leader in Europe in the field of private-label fashion jewellery and accessories and provides retail concession services in 25 countries. Today's decision in summary proceedings can be found in Dutch here, and in English here.
Nordian Capital was selected in a controlled auction, after the firm submitted a binding offer with fully committed financing. The owners of J-Club and Nordian Capital entered into a signing protocol on 28 February 2020, which provided for the signing of an SPA in agreed form. At that time, the first case of COVID-19 in the Netherlands had already been reported. The signing of the SPA was made subject only to Nordian Capital taking out warranty and indemnity (W&I) insurance.
On 19 March 2020, Nordian Capital tried to walk away from the signing, claiming that they had not been able to obtain W&I insurance and that they wished to postpone the transaction pending clarity of the effects of the COVID-19 outbreak and the measures taken in response. The owners of J-Club lodged summary proceedings to secure the signing of the SPA.
The court ruled in favour of J-Club's owners, finding that Nordian Capital had not honoured its best efforts obligation to obtain W&I insurance and that the condition provided for by Article 6:23(1) DCC was fulfilled. Nordian relied on Article 6:258 DCC ("unforeseen circumstances") and argued that the sellers could not expect the SPA to be signed in its agreed form in view of the circumstances resulting from the COVID-19 outbreak. The court dismissed this defence. The potential consequences of COVID-19 for J-Club, including the possibility of a lockdown, had been discussed before the signing protocol was entered into, and Nordian Capital had waived the inclusion of a material adverse change clause after this possibility had been discussed.
The owners of J-Club were represented by Marieke Faber and Paul Olden. The transaction team was headed by Jeroen Preller.