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M&A and Private Equity Bulletin: Cineplex v Cineworld

On December 14, 2021, the highly anticipated judgement in Cineplex v Cineworld, 2021 ONSC 8016 was delivered by Justice Conway1 as it relates to the interpretation of different types of covenants that are commonly found in definitive agreements of M&A transactions. The Court was called on to interpret various provisions of an arrangement agreement between Cineplex and Cineworld (collectively, the “Parties”), with particular regard to the interplay between the wording of a material adverse effect covenant (“MAE”) and various other interim covenants negotiated by the Parties. This decision further develops the law and the legal interpretation surrounding contractual risk allocation mechanisms that are commonly used to alleviate and address deal risks within M&A transactions.


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