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 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.