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Deadlines are important, especially ones that are specifically negotiated between parties to a contract. The recently released 2021 American Bar Association Private Target Deal Points Study found that 20% of deals included in the study defined the consequences resulting from a buyer’s late delivery of a post-closing purchase price adjustment statement. This deal point may become more important in light of the Delaware Court of Chancery’s decision in Schillinger Genetics, Inc. v. Benson Hill Seeds, Inc.

In Schillinger, the Delaware Court of Chancery ruled that a buyer could not recover funds from a seller under a purchase agreement because buyer missed a clear deadline. The court’s decision serves as an important reminder to all parties to an M&A transaction and their counsel to pay close attention to the temporal parameters specified by the governing purchase agreement.


In February 2019, Benson Hill Seeds, Inc. (Buyer) purchased the assets of Schillinger Genetics, Inc. from its founder (Seller) for $14 million, pursuant to an asset purchase agreement (APA) and related documents. The APA contemplated a post-closing purchase price adjustment and set forth a process for calculating and paying any adjustment out of escrowed funds. There were also escrowed funds to secure the Seller’s indemnification obligations.

The parties’ relationship soured after the closing. Buyer failed to deliver its price-adjustment calculations (Closing Statement) by the 90-day post-closing deadline. Seller engaged Buyer in several communications, each time noting Buyer’s breach of the delivery requirement for the Closing Statement. When finally delivered two months after the deadline, the Closing Statement noted that Buyer wanted to claw back $80,000 in a purchase price adjustment from the escrowed funds. Buyer also refused to execute instructions to the escrow agent to release escrowed funds in connection with the purchase price adjustment.

In addition, Buyer discovered that Seller engaged in pre- and post-closing conduct that allegedly breached certain APA representations. Buyer then issued a claim for indemnification via overnight courier, which was sent on the last day of the indemnification period but received by Seller the next business day (i.e., after the end of the indemnification period).

Post-Closing Adjustment

Buyer’s obligation to deliver the Closing Statement within 90 days post-closing was mandatory and unconditional under the APA. There was no “grace period” for being late in the purchase price adjustment mechanism in the APA. Although Seller had continued to engage with Buyer following the delivery deadline, the court determined that Seller did not waive its right to timely delivery of the Closing Statement because in each communication Seller confirmed that Buyer was in breach of the APA. The court concluded that Buyer, by submitting the Closing Statement late, forfeited its right to a post-closing adjustment and determination of the final adjustment amount.

Delivery of Indemnification Claim

Similar to its argument with respect to delivery of the Closing Statement, Seller argued that Buyer should not be entitled to recover under its indemnification claim because it was not timely delivered.  The court agreed with Seller that Buyer’s claim notice was late; however, the court held that Buyer’s indemnification notice was adequate because the APA afforded Buyer flexibility when noticing and preserving indemnity claims. Under the APA, failure to properly deliver the indemnification notice would only impact Buyer’s right to be indemnified by Seller if the failure caused actual and material prejudice. Given that receipt was only one day late, the court determined that Seller was not prejudiced by the late delivery and Buyer was free to pursue its indemnification claim.

Key Takeaways

  • Clear contractual language will generally be respected by courts. In this case, the court not only respected the specific deadlines that were set forth in the APA, but also the clearly stated consequences of failing to deliver timely notice. 
  • In negotiating post-closing deadlines, consider whether a “grace period” is appropriate or whether certain “received by” deadlines should be flexible.
  • As a best practice, keep track of post-closing deadlines by placing reminders on your calendar.

Media Contact

Heather A. Scott

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