Assets Held In Trust Under An Asset Purchase Agreement

Often we are asked to assist clients with preparing an asset purchase and sale agreement where all or a portion of the assets require third party consents to the transfer, but those consents cannot be obtained prior to the closing date. In such cases, the agreement is drafted such that the seller will hold these assets in trust for the purchaser until such time as they can be transferred.

This raises questions about what rights the purchaser has to force a transfer of the assets if the seller neglects or fails to obtain the consents necessary to complete the timely transfer of the assets. (Note, in cases where a third party cannot or will not consent to the transfer, the bare trust will still apply such that the seller will be obligated to hold the assets in trust for the benefit of the purchaser and to participate to the extent needed, in managing said assets.)