Covid-19: Has It Had A Material Adverse Effect?

Sadly but unsurprisingly, the COVID-19 outbreak has been having a major negative impact on many businesses and, in the case of Travelport Ltd v Wex Inc¹, the High Court considered the construction of a material adverse change clause in a share purchase agreement in light of the effects of the pandemic.

Background:

• In January 2020, Wex (the buyer) and Travelport (the seller) entered into a share purchase agreement (SPA) for the sale and purchase of two target groups, eNett International (Jersey) Limited and Optal Limited and their respective subsidiaries, for a total purchase price of approximately US$1.7 billion.

• The Optal group's business included issuing virtual credit card account numbers that could be used by one business to pay another. Accounting for around 98% of the Optal group's revenues was the business from its key client, the eNett group, whose main business was providing B2B payment services to customers operating in the travel industry.