Litigation Buyout and Special Situation Insurance
Comprehensive, flexible protection against financial loss following a wide range of events that could prevent the successful completion of Mergers and Acquisitions (M&A).
New Zealand has strong market conditions for people looking to sell their business. With lower regulatory hurdles than some other countries and a stable political and legal environment, New Zealand can also be an attractive environment for offshore investors. These factors support the current M&A activity in New Zealand.
As in all markets, however, there are a number of risk factors that can hinder the successful implementation of a merger, acquisition or restructure. These may include product liability disputes, breaches of legislation or regulations, employment, contractual or intellectual property disputes and those relating to the operational or trading history of an organisation.
Litigation Buyout Insurance from AIG can be used to facilitate an M&A transaction by ‘ring-fencing’ liabilities, potentially removing a deal-breaking obstacle. It can also negate the requirement for the use of escrows or indemnities, providing certainty and finality to both parties to the transaction.
Litigation Buyout Insurance coverage allows you to ‘de-risk’ your business by removing or reducing the contingent liability arising out of litigation, which may otherwise represent an unquantifiable liability.
The insurance provides certainty to an insured business as the potential liability arising out of the litigation is quantified and ‘ring-fenced’.
Coverage is usually for a specific known risk, lawsuit or claim, but may also allow for threatened litigation or an anticipated claim. It can also be written to cover a portfolio of claims arising out of the same facts or circumstances.
You may choose to include defence costs in the insurance program limit, or may choose to only cover the amount of any award of damages.
Businesses that have incurred a contingent liability, most commonly a dispute or litigation, that wish to ring-fence any associated liabilities, often in anticipation of a sale or divestment.