Asset Deals: “All or Substantially All of the Assets”
I remember my law school property professor’s discussion of the dreaded “rule against perpetuities.” I didn’t get it, and neither did my classmates. Finally, the prof threw in the towel, and said something along the lines of “I’m going to give you the same advice I got – there’s a definitive 1938 Harvard Law Review article on the rule against perpetuities. If you read it carefully, you will know enough about the rule to give the wrong answer to the question they’ll ask about it on the bar exam.”
Anyway, I sort of think that the whole issue of what constitutes a sale of “all” or “substantially all” of a company’s assets is corporate law’s version of the Rule Against Perpetutities. When I taught law school, I used to tell my students that if they did this stuff for a living, they’d eventually be asked to write the same 20-page memo on whether a particular deal involves the sale of substantially all of the assets of a company that the lawyer assigning it to them wrote 25 years ago. And the answer will also be the same – some variation of “maybe, but then again, maybe not.
If you’ve already drafted this memo, I can’t be of much help to you. But if you haven’t, I can at least point you in the direction of a Greenberg Traurig memo that introduces the Nevada sale of assets statute, discusses its plain meaning, and reviews case law interpreting “all” and “substantially all” in the sale of assets statutes in various other jurisdictions including Delaware, California, Connecticut, and Illinois. If you read it carefully, you’ll know enough to give a more definitive tone to the “maybe, but then again, maybe not” answer you give in your memo.
-John Jenkins, DealLawyers.com May 17, 2019
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