Litigation Team Prevails in Arbitration Over Holdback and Earn-Out Dispute, Awarded Over $625,000
Hamburg, Rubin, Mullin, Maxwell & Lupin is proud to announce a significant arbitration victory in a matter led by Mark F. Himsworth, Esq. and Brittany Ann Kane, Esq. on behalf of the sellers of a major pharmaceutical business in a complex post-closing dispute arising from a multi-million-dollar transaction.
Following a day-and-a-half evidentiary hearing, the Arbitrator issued a Partial Final Award in favor of the firm’s clients, finding that the buyers breached key provisions of the Asset Purchase Agreement between the parties. The dispute stemmed from the buyer’s failure to timely prepare and deliver required holdback and earn-out statements, as well as their improper attempt to reduce the purchase price by excluding revenue-generating contracts and patient counts, thereby violating the agreement’s express terms.
Attorneys Himsworth and Kane demonstrated that several contracts were wrongly classified as “terminated” by the buyer, despite being excluded from the definition of “terminated” under the Agreement due to the buyer’s own service failures or because services did not cease during the applicable period of time.
In his award, the Arbitrator ruled decisively in favor of the sellers, ordering the buyers to pay:
$451,728.00 for amounts wrongfully withheld under the holdback provisions of the Asset Purchase Agreement;
$109,688.00 for unpaid earn-out amounts; and
Pre-judgment interest at six percent (6%), totaling more than $64,000 from the date of the breach through January 26, 2026.
The total award currently exceeds $625,000, which represents every penny that the firm’s clients sought at the time of arbitration.
Importantly, the Arbitrator also granted the sellers leave to seek attorneys’ fees, arbitration costs, and expenses, including American Arbitration Association (AAA) administrative and arbitrator fees, under the agreement’s fee-shifting provisions. A subsequent ruling on fees and costs is expected following additional briefing.
This outcome highlights the importance of precise post-closing compliance in asset purchase agreements, the importance of diligence in monitoring whether a buyer is complying with their post-closing obligations, and reflects HRMM&L’s ability to successfully litigate complex contractual and transactional disputes through arbitration.