M&A Update: Delaware Case Addresses Material Adverse Effect

On September 29, 2008, the Delaware Chancery Court decided Hexion Specialty Chemicals, Inc. (Hexion), et al. v. Huntsman Corp. (Huntsman) and addressed several legal issues that are important to deal professionals among these (i) expanding on prior law regarding a party’s ability to demonstrate that a material adverse effect (MAE) has occurred, (ii) determining which party to a contract bears the burden of proving that an MAE has occurred and (iii) defining what constitutes a “knowing and intentional” breach of contract.